Mean Reversion With Order Flow

Mean reversion isn't simply selling every high and buying every low.

A mean-reversion strategy looks for price to return toward a reference area after moving away from it.

Depending on the strategy, that reference could be VWAP, a value area, or another statistically or structurally meaningful level.

Order flow may help assess whether a move is losing momentum or whether aggressive participation is failing to produce further progress.

But a strong trend can remain extended for much longer than expected.

That's why I want to distinguish between a market that is temporarily stretched and a market that is genuinely reversing.

Context first. Confirmation second. Risk always.

#MeanReversion #VWAP #OrderFlow