Mean Reversion Trading — Part 2 | The Long & The Short Ep.17 скачать в хорошем качестве

Mean Reversion Trading — Part 2 | The Long & The Short Ep.17

Welcome to The Long & The Short - a show where you can expect an honest take on trading, something you won’t hear elsewhere. I’m your host, Sandeep Rao (SEBI Registered Research Analyst – INH000013059). In the previous episode, we established the "Theory" of Mean Reversion. In this episode (Part 2), we move from theory to Practice. We break down the actual mechanics of building a Mean Reversion system. While Trend Following is about "joining the crowd," Mean Reversion requires a counter-intuitive psychological view-betting that the "rubber band" has stretched too far and will snap back. We explore the four distinct ways to trade this concept: 1. Single Asset Price Reversion: Buying the dip when price deviates from its hourly/daily average. 2. Volatility Reversion: Anticipating price explosions using concepts like the Bollinger Band Squeeze and Narrow Range patterns. 3. Relative Value: Exploiting gaps in Basis, Calendar Spreads, and Synthetic Futures. 4. Pairs Trading: The "Stat Arb" approach used by institutions. Finally, we build and backtest a Long-Only Mean Reversion Strategy on Nifty and Gold using Bollinger Bands to see if "buying the fear" actually generates alpha. 📌 Chapters: 00:00 Intro: From Theory to Practice 00:51 Psychology: Trend vs. Counter-Trend 02:16 Type 1: Single Asset Price Reversion 03:05 Type 2: Volatility Reversion & The "Squeeze" 05:34 Type 3: Relative Value (Basis & Spreads) 08:04 Type 4: Pairs Trading & Stat Arb 09:34 Strategy Showcase: Nifty & Gold System 12:00 Backtest Results: "Filling the Potholes" 14:01 Conclusion & What’s Next References & Show Notes: Contango & Backwardation: https://zerodha.com/varsity/chapter/f... Ep. 16 - Mean Reversion Trading (Part 1):   • Mean Reversion Trading — Part 1 | The Long...   Trend Following Series (Ep 9-11):    • Trend Following Series   6 Key Weekly Market Metrics You Should Track:    • 6 Key Weekly Market Metrics You Should Tra...   Tom Basso: Trend Following, Risk, and the Long Game | In The Money by Zerodha Podcast 02:    • Tom Basso: Trend Following, Risk, and the ...   What is Synthetic Futures?:    • What is Synthetic Futures?   If you prefer reading, we've written a post about this episode here: https://inthemoneybyzerodha.substack.... Do check out our newsletter "Aftermarket Report" where we do a quick daily wrap-up of what happened in the markets, both in India and globally. Here: https://aftermarketreport.substack.com/ Check out Varsity Live, a hands-on way to learn finance with experts. Instead of only listening, you practice in real time through activities like personal finance planning, technical charting, balance sheet analysis, and more: https://varsitylive.zerodha.com/home Disclaimer: Investments in securities are subject to market risks. Please read all related documents carefully before investing. SEBI registration does not guarantee the performance of the intermediary or assure returns to investors. The securities mentioned are for illustrative purposes only and do not constitute a recommendation. By proceeding, you acknowledge and agree that any returns shown on this platform are solely for informational purposes. They are not intended to serve as advertisements or promotional material, nor should they influence your investment decisions. Trading and investment decisions should be made at your own discretion, and it is strongly advised to consult a qualified financial advisor before acting on any information provided. Note: Some image(s) may have been created using Al, no copyright infringement is intended. About Zerodha At Zerodha, we simplify complex financial topics to empower you with the knowledge to make smarter investment choices. Whether you're just getting started or looking to sharpen your skills, we’re here to help you navigate the financial world with clarity.