๐Ÿ”„ Mean Reversion โ€” Buy Low, Sell High

Mean reversion is opposite of momentum. Trader assumes: price deviated from mean will return. Effective in sideways market, weak in strong trends.

Main Indicators

Bollinger Bands (price touches lower band = oversold). RSI < 30. Stochastic < 20. Z-score: |price - MA20| / SD > 2.

Entry Setup

Buy when: price touches Bollinger Lower + RSI < 30 + bullish reversal candle (Hammer, Engulfing). Stop loss: below support/swing low.

Take Profit

TP at MA20 (mean). Or Bollinger Upper. Or R:R 1:2. Don't be greedy โ€” mean reversion = small profits + high win rate.

When NOT to Use?

Strong bear market: price can be "oversold" and continue falling 50%. Mean reversion fails in strong trends.

Pair Trading

Advanced version: long underperformer vs short outperformer in same sector. Beta-neutral, less market risk.

๐Ÿš€ Test this on Vnstock

๐Ÿ”— Related Strategies

๐ŸŒŠ Swing Trading โ€” 3-21 Day Holding Strategy
โ† All Strategies ยท ๐Ÿ‡ป๐Ÿ‡ณ Vietnamese