T2W Bot

Staff member
1,496 115
Markets quite often exhibit tendencies that, for the astute trader, may translate into profits. One such tendency is what I refer to as the "rubber band effect." Markets tend to overshoot, similar to a rubber band that’s stretched to its extreme and snapped back to its normal tension; so, too, do the markets. In mathematics, it’s known as reversion to the mean. This theory is based on a phenomenon stating that when the price of any market deviates substantially away from its medium price, the odds are enhanced that it will revert or move back towards the average. This pattern is repeated quite often in the markets and is extremely worthwhile in identifying, as it may uncover some very attractive risk/reward opportunities.
The implications for designing a trading system around this thesis are quite good, as from my own experience it generates a higher than average success rate. In addition, when coupled with time frame analysis and sound execution rules, the odds are slightly...

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jostein

Newbie
1 0
This is a great article!

Does anyone have a recommendation on a good platform to backtest or maybe even automate this strategy?
 
 
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