FX Trading

13Jul/140

Forex Mean Reversion

Forex Mean ReversionClick Image To Visit SiteMany traders, even those with experience use systems based on at least one of the Top five indicators which fall into one of two categories; "Leading" or Lagging:

"Leading" indicators are inappropriately named because none of them lead with any form of reliability. If this was not true then all traders would simply Buy an Oversold market and Sell it when it was Overbought, and vice versa. Systems based on "Leading" indicators do not work for one simple reason – None of them lead with any form of reliability.

Lagging indicators and systems based on them are ineffective because, as the name suggests – They lag.

The Forex Mean Reversion System is based on the Forex Mean Reversion Indicator – It is neither a "Leading" or a Lagging indicator – It is a real-time indicator that is based on a fundamental fact.

It provides a true indication of when a market is Overbought/Oversold – On ALL instruments across ALL time-frames.

Mean reversion – FACT: Prices will fluctuate from a mean (price) to different Highs and Lows and will always revert to a mean (price) at some stage in the future. Below is a list of popular definitions for Mean Reversion, including their sources:

Unlike no other indicator, the Forex Mean Reversion Indicator is a real-time indicator based on a fundamental fact. It calculates and displays a Mean (price) based on the Mean level (a Simple Moving Average) setting.

It then calculates and displays two levels either side of the Mean – These levels are based on percentage movements derived from the current Average True Range (ATR) reading.

Level 1 is a suggested Entry level (where a reversion to the mean is expected) and Level 2 is a suggested Stop level (where historically, prices rarely, if ever, extend to).

Both levels, as well as... Read more...

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