Mean Reversion Strategy

*Available with Premium subscriptions.
Description:
Back-testing shows why this is a favorite traders’ strategy (SPY daily (with take profit settings .71/.21) chart used as an example)!
To obtain an “edge” traders must formulate a high probability strategy, but that requires clearer vision into the market price action. This strategy provides a picture of trading ranges subdivided into numerous technical levels utilizing, support & resistance zones, Bollinger Bands, previous day & premarket highs and lows, and fair value gaps (FVGs). Signals are generated while measuring stochastic, RSI, EMA positions, and crossings with BBR’s.

This algorithm generates trades with relatively moderate to low frequency of trades depending on chart timeframes. Even though there outstanding back-testing results on the SPY daily chart as exampled, no indicator nor strategy can provide guarantees of success due to the volatile dynamic nature of the stock markets, however the Mean Reversion Strategy will be an invaluable tool in finding high probability trades.

Unique Features:

• High probability and moderate trade frequency.
• Many user-selectable options and settings to customize unique requirements.

Indicator Options:
Go to indicator settings under the “Input” tab section to customize:

• Adx threshold – trend level setting where higher number is more restrictive and less trades.
• Stop-loss and take-profit settings
• RSI, Bollinger Bands and Keltner Channels parameters along with line/label styling options.
• RSI
• DMI, Stochastic, and moving averages parameters
• Buy/Sell signal hide/show and line color options.
• User-selectable buy, sell, and take-profit alerts. Optional alerts must be configured on the TradingView chart and added for the Mean Reversion Strategy.
• More line/label style options are available under “Style” tab.

Usage Tips:

• When first installing onto a new chart, the chart will be compressed and will require expansion by spreading the chart scale that is usually on the right of chart.
• Backtesting: To backtest this script, “Order size” under the “Properties” tab must be at least “1”.
• Apply this strategy to multiple timeframes (5m, 15m, 60m, and daily recommended) to see the pattern progressions properly to aid in trading choices. Proper risk management and adequate experience are required to achieve long term trading success. This strategy is a tool designed to complement a trader’s intuition that only developes over much screen time and trading experience.
• Buy/Sell plots are generated when technical data aligns based on Bollinger Band and Keltner Channels relationship.
• Take-profit levels are generated calculating RSI, Stochastic, and DMI technical levels.
• Showing optional DMI trend background colors is recommended.
• A recommended exit strategy is to take partial profits on each push wave towards the target and fully out when reaching the target cross.
• As with fundamental rules for trading, stop-losses are highly recommended.

Chart Labels:

• “BB”, “BB Upper”, “BB Lower: Bollinger Bands
• “C”: close short (when plot exit signal option is on)
• “E”: exit long (when plot exit signal option is on)

*This script is free to use with premium member access.

Disclaimer:
Achieving trading success hinges on adherence to your strategy, with indicators complementing rather than dictating trades. This script serves solely for informational and educational purposes and does not offer professional or financial advice. You assume full responsibility for evaluating the script output and its associated risks.

By utilizing the script, you agree to absolve Stock_Waver (TradingView user) of any liability for damages arising from decisions based on it. Stock_Waver is not affiliated with TradingView, Inc. Remember, experience and sound risk management are invaluable, and there’s no substitute for them, be it indicators or strategies. Thank you!