Mean-reversion strategies
Mean-reversion does the opposite of trend-following: it buys unusual weakness and sells back into strength, betting a stretched price snaps back toward its average. That bet is right often enough to matter — but when it's wrong it's really wrong, because a genuine breakdown keeps going while the strategy keeps buying. A stop-loss isn't optional here; it's the whole risk model. It works best in range-bound, choppy markets and gets run over by strong trends.
Each one below is a mechanism to test, not a recommendation. Open it to see exactly how it works in plain English, then backtest it yourself — costs on, no look-ahead, measured against buy & hold — or open it in the builder to tweak.The sparkline on each card is the strategy's performance relative to buy & hold — it only rises when the strategy is beating a passive hold.
- Bollinger Band ReversionMicrosoftBuys a close under the lower Bollinger band and exits when price returns to the middle band▼ lagged buy & hold
- Connors RSI-2 DipS&P 500 ETF (SPY)Above the 200-SMA, buys a 2-day RSI plunge and exits on the pop back over the 5-SMA▼ lagged buy & hold
- Lower Band Break FadeEthereumBuys a close beneath the lower Bollinger band, exits at the middle band, with an ATR volatility stop
- Lower Band Stop-Guarded DipAlphabet (Google)Buys a close below the lower Bollinger band and exits as RSI(14) recovers past 50, with a stop and target▼ lagged buy & hold
- RSI-14 Oversold ReversionAppleBuys when RSI(14) drops under 30, exits as it recovers back toward the 50 midline▼ lagged buy & hold
- RSI-2 Pullback Trend FilterNasdaq-100 ETF (QQQ)Above the 200-day line, dip-buys a deep 2-day RSI oversold; exits on a close back over the 5-day average, with an 8% trailing stop as backstop.▼ lagged buy & hold
- Stochastic Dip BuyBitcoinBuys when %K drops under 20, exits over 50, sized by an ATR stop to a fixed risk budget
- Stochastic Oversold BounceAmazonBuys when %K falls below 20 and exits once %K climbs back above 50▼ lagged buy & hold