Reversion to Mean Trading

What is Reversion to Mean?

Reversion to Mean (RTM) is a proven trading strategy that focuses on capturing profits when prices move too far from their average and are likely to 'snap back' to a normal range. By targeting these predictable price movements, traders can reduce risk and aim for consistent gains, regardless of market conditions. It's all about finding balance in extremes!

68%

80%

Studies show that over 80% of price movements in financial markets are noise and tend to revert to the mean over time, making RTM strategies particularly effective for capturing those pullbacks or rebounds from extremes.

In financial markets, price movements often follow a normal distribution, with about 68% of price action falling within one standard deviation of the mean (the center of the bell curve). This means that extreme price movements (those far from the mean) are relatively rare and tend to "snap back" toward the average, making these moments prime opportunities for mean reversion trades. By focusing on these extremes, traders can capitalize on predictable, high-probability moves back to the mean.

Why RTM Works

✅ Lower risk, consistent results

✅ Clear targets for easier trading

✅ Works on any asset or market

✅ Works in any market condition

✅ Perfect for traders at any level

Everything You Need to Know to Trade RTM

Providing an in-depth introduction to reversion-to-mean trading, explaining its core principles, benefits, and how it empowers traders to make consistent, low-risk trades by capturing price movements back to the average.

Advanced Strategies

Diving into specialized reversion-to-mean techniques, including, Fibonacci, the use of channels, supply and demand zones, and position sizing methods to refine and optimize trading setups.

Core Concepts

Foundational knowledge on reversion-to-mean trading, covering essential principles, risks, and strategies to help traders understand how and why prices tend to revert to an average over time.

Key Indicators

Introducing the essential tools and metrics, such as moving averages, ATR, and oscillators, that help traders identify high-probability reversion-to-mean setups, lower risk and improve trade timing.

Market Insight

Discover how market cycles, phases, and volatility impact reversion-to-mean trades, using essential indicators and internal data like bond yields, the VIX, and sentiment indexes for smarter trading insights.

Visit the ETM Feed Now

Dive into the ETM Feed now, and on a daily basis, to explore curated insights, practical tips, and powerful tools designed to elevate your Reversion-to-Mean trading strategy. From beginner basics to advanced techniques, there’s something here for every trader.

Little Lessons

The Little Lessons tweet series is packed with quick, practical tips and insights to sharpen your Reversion-to-Mean trading skills. Each lesson is designed to deliver big value in a simple, easy-to-digest format. The are tweets you save as reminders...and post-its.

RTM 101

A series of concise, actionable tweets designed to introduce you to the essentials of Reversion-to-Mean trading. From foundational concepts to practical tips, this series is your go-to resource for mastering the basics in a quick, engaging format.

Did You Know

An engaging tweet series that uncovers fascinating insights, tips, and facts about Reversion-to-Mean trading. Perfect for expanding your knowledge with quick, thought-provoking nuggets that can enhance your trading strategy.

Free Tools

Explore our Free Tools series of tweets, highlighting must-have resources like our checklists, cheatsheets, and guides designed to simplify your Reversion-to-Mean trading journey and boost your success. Unquestionably valuable, and free. Win-Win!