What is simple mean reversion?

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Charles Farley
Answered 1 year, 5 months ago
<p>Mean reversion in trading theorizes that prices tend to return to average levels, and extreme price moves are hard to sustain for extended periods. Traders who partake in mean reversion trading have developed many methods for capitalizing on the theory. In all cases, they are betting that an extreme level — whether it be volatility, price, growth, or a technical indicator — will return to the average.</p>
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