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Mean Reversion Stock Trading

dow_MRIn stock investing, mean reversion refers to the tendency of the stock price moving towards to its mean or average over time. In particular, when the current price is less than the mean, the stock is considered under valued and expected to rise. On the other hand, when the current price is above its average, the stock price is over valued and is expected to fall. Mean reversion trading is about trading strategies to buy or sell the stock when its performance has greatly deviated from its average. Read more