Mean reversion is a concept in finance that suggests, after an extreme price move, stock prices tend to return back to normal or average levels.
Prices do move away from the mean sometimes but revert to the mean price over time.
Quick Short ๐ก
A backtested ๐๐ป๐๐ฟ๐ฎ๐ฑ๐ฎ๐ ๐ ๐ฒ๐ฎ๐ป ๐ฅ๐ฒ๐๐ฒ๐ฟ๐๐ถ๐ผ๐ป trading strategy ๐ ๐
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Mean reversion is a concept in finance that suggests, after an extreme price move, stock prices tend to return back to normal or average levels.
Prices do move away from the mean sometimes but revert to the mean price over time.
๐๐ ๐ฎ๐บ๐ฝ๐น๐ฒ:Extreme Gap-ups and Gap-downs
Stock tends to come back to intraday mean prices
or
Longer term moving average (100 and 200 ema) depending on the time frame you are looking at
1๏ธโฃ Whenever stocks have a large opening gap, they tend to come back to the mean levels.
2๏ธโฃ Backtesting is done on Nifty500 Universe and probabilities are calculated on stocks which have highest chance to fall based on historical data.
๐ธ So out of say 10 stocks that have opened Gap-up , each stock is ranked based on a proprietary algorithm and the stock with the highest odds to revert to the mean is selected.
๐ธ Enter at 9:16 to 9:20
๐ธ Stoploss Max 10% from entry price for the day
๐ธ Capital : โน1.5 Lakh (Suggested to include drawdowns) excludes the availble margin by broker
๐ธ Capital Deployed : โน1 Lakh Max
๐ธ Here are the charts that show trades where stop-losses were hit.
๐ธ Model was trained for 7 years where all type of market conditions (Bullish, Bearish & Sideways)were covered and a volume filter was applied which filtered 257 stocks from 500.
๐ธ Example : In March 2022 we made 29000 on โน1 lakh and we lost โน18k in december 2021
Ex:
๐ธ Stock: #JKIL is given a short at 9:08am you need to take entry by 9:17 at market price & short it intraday
๐ธ Stoploss = 10%
๐ธ Position Size = Total Capital/Stock Price
๐ธ Position Size =โน1,00,000/โน315 = Approx 300 Qty of JKIL
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2. The heritability of IQ *increases* from childhood to adulthood. Meanwhile, the effect of the shared environment largely fades away. In other words, when it comes to IQ, nature becomes more important as we get older, nurture less. https://t.co/UqtS1lpw3n
3. IQ scores have been increasing for the last century or so, a phenomenon known as the Flynn effect. https://t.co/sCZvCst3hw (N โ 4 million)
(Note that the Flynn effect shows that IQ isn't 100% genetic; it doesn't show that it's 100% environmental.)
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For example, though far from perfect, IQ is the single-best predictor of job performance we have โ much better than Emotional Intelligence, the Big Five, Grit, etc. https://t.co/rKUgKDAAVx https://t.co/DWbVI8QSU3
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1. IQ is one of the most heritable psychological traits โ that is, individual differences in IQ are strongly associated with individual differences in genes (at least in fairly typical modern environments). https://t.co/3XxzW9bxLE
2. The heritability of IQ *increases* from childhood to adulthood. Meanwhile, the effect of the shared environment largely fades away. In other words, when it comes to IQ, nature becomes more important as we get older, nurture less. https://t.co/UqtS1lpw3n
3. IQ scores have been increasing for the last century or so, a phenomenon known as the Flynn effect. https://t.co/sCZvCst3hw (N โ 4 million)
(Note that the Flynn effect shows that IQ isn't 100% genetic; it doesn't show that it's 100% environmental.)
4. IQ predicts many important real world outcomes.
For example, though far from perfect, IQ is the single-best predictor of job performance we have โ much better than Emotional Intelligence, the Big Five, Grit, etc. https://t.co/rKUgKDAAVx https://t.co/DWbVI8QSU3
5. Higher IQ is associated with a lower risk of death from most causes, including cardiovascular disease, respiratory disease, most forms of cancer, homicide, suicide, and accident. https://t.co/PJjGNyeQRA (N = 728,160)
