Mean Reversion

Mean Reversion, is a process by which stocks that have moved up or down an unusual amount relative to a time frame, tend to reverse direction and move back to the averages.  Mean Reversion is also a type of stock trading strategy.  In a mean reversion trading strategy, once you are able to identify a stock or stocks that have moved an unusual amount, you take the trade in the opposite direction of the momentum.  If a stock moves up you will be trying to short sell and if a stock moves down you will be looking to buy.  Trade Ideas also has the Automated Trading Robot that allows a trader to automatically trade mean reversion strategies programmatically through their broker.

Alert Types

We offer the following alert types which are related to this topic.  Click on the icon for a detailed description of the alert, or click on the example link for additional samples of each type of alert.