Mean reversion is one of the two ways of identifying and trading the turning points in the market. In today’s Tip TV Education segment, Dr. Corvin Codirla, Fund Manager and Founder of FXMasterCourse.com, talks about ‘mean reversion’ trading.
Codirla says, “Mean reversion means finding things which are closely related or which have underlying story that drives the market in a particular direction and every time you are away from that… trade back for to the mean.”
Codirla backs the theory with real life examples – S&P 500 Mean Reversion (single asset) and two currencies against each other, for e.g. AUD/NZD (one asset against another).