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.
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