Mean Reversion

Also called: counter-trend trading, fade

Trading on the assumption that price will return to its average — buying overshoots, selling overshoots in the other direction.

Mean reversion is the philosophical opposite of trend following. Often high win rate (60–80%), modest R:R, vulnerable to fat-tail events when ‘reversion’ becomes a trend. Bollinger Band fades and RSI extreme reversals are classic mean-reversion plays.