When price deviates 2+ standard deviations from its mean, reversion is statistically likely. Use Z-Score to measure deviation and time entries.
Indicators Used
Z-Score (20)Bollinger BandsRSI (14)Hurst Exponent
Rules
📈 Long (Oversold)
- Z-Score drops below -2.0
- Price at or below lower Bollinger Band
- RSI below 25
- Hurst Exponent < 0.5 (mean-reverting regime)
- Enter long, target Z-Score = 0 (mean)
📉 Short (Overbought)
- Z-Score rises above +2.0
- Price at or above upper Bollinger Band
- RSI above 75
- Enter short, target mean
66%
Win Rate
1.4:1
Avg R:R
6-12
Trades/Week
💡 Pro Tip
Check the Hurst Exponent first. If H > 0.5, the market is trending and mean reversion will fail. Only trade mean reversion when H < 0.5.