Mean Reversion Strategy

Prices often return to their mean after extreme movements. Mean reversion traders exploit this by:

- Identifying overbought/oversold levels using tools like Bollinger Bands or Keltner Channels

- Buying dips or shorting spikes near the 3rd standard deviation

- Targeting a return to the 20-day moving average

- Using stop-losses in case the trend continues

It’s not foolproof - but with appropriate risk/reward, it is powerful in varied markets.