Mean Reverting
The term adopted in academic literature for one possible state of a price series: that state when price is oscillating randomly about some (unknown) mean value. That is, it is not trending.
Volatility is mean reverting. This means that periods of high volatility will eventually revert to their mean and periods of low volatility will eventually rise to their mean.
Mean Reverting: The state when price is oscillating randomly about some mean value.
Median Line: The line that is drawn from an extreme that bisects a line drawn through the next corrective phase after the pivot point.
The basic thesis is that profit margins are mean reverting. If any company gets an excessive margin, competition will arise and bring the profits to a more normal level.
Profits by these kind of mean reverting systems disappear on few strongly trending days.
A filter is needed to keep the system realistic and robust, couple of years of backtesting doesn't cut it.
Cheers.
Most trading systems are either trend following systems or mean reverting systems, which are also called contrarian systems. However, you can combine elements of both into one system. ...
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Smart Trader 60 uses a combination of stock profiles such as taking long and short positions to eliminate the random, memory-less component; thus, we are left with oscillating and mean reverting signals that more reliably indicate profitable ...
The reason for this is that the Stochastics derives a trading signal based on the assumption that the exchange rate exhibits mean reverting tendencies within the actual trading range, marked by Max and Min prices.
is most effective for a market that is quiet (relative low volatility) and trending. For this reason, trend traders often focus on commodities, which show a stronger tendency to trend than on stocks, which are more likely to be mean reverting (which ...
 See also: Market, Profit, Trading, Trend, Analysis
  
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