OK so heres the basis...
Price is a number, and as the number moves up/down you can calculate a mean average. Mean Reversion trading is basically betting that the price will go back to the mean value and you will profit from the movement.
Ideas for mean reversion system:
Equity indexes:
You take the Dow components, plot them on a daily return in % chart. You buy/sell the extreme value stocks, and sell the index, profit the difference (possibly use options on the index?)
Forex:
Same as equity, except you plot the G7 currencies, buying the low, selling the high and betting they will revert to a mean value.
ANYWAYS, just an idea...my math and programming skills aren't high enough to work on this further. Just a post for later down the road.
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