Technical AnalysisStrategyMembers
Mean Reversion vs Trend Following: Two Edges
intermediate·7 min read·Tier 2
The two great families of price strategy pull in opposite directions. Knowing which one you're trading — and when — is half the battle.
Almost every price-based strategy belongs to one of two families that pull in opposite directions. Trend following bets that a move will continue. Mean reversion bets that a move has gone too far and will snap back. Confusing the two — or trading one with the other's rules — is one of the quietest ways to lose money.
Two opposite bets
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