How Trade Trends With Mean Reversion Strategy!

Why It Matters

These practical rules help traders align execution and risk with market structure—reducing losses on false breakouts and improving trade selection by matching strategy to whether the market is range-bound or trending.

Summary

The presenter explains how to distinguish trend days from range days by measuring intraday expected range (example: Dow Jones 78R of 650 points) rather than relying on visual impressions. On range days the recommended tactic is a mean-reversion approach: post liquidity at two standard deviations above and below the mean and use VWAP as an initial target. The speaker warns against trading on outside-up days (avoid trading) and notes outside-down days can present better longing opportunities due to positive market skew. He also acknowledges that pure trend-following (e.g., using an 8-period moving average) is a separate strategy for clearly trending markets.