If you like mean reversion over trend, what are the advantages?

[traderking007]

thinking about your longer term trading spreads if the micro time frame the bid ask spread is the reversion trade now that works 99.9 % of the time then the opposite of it would be long term and it should work 99.9 of the time. years ago like 22 a guy from the cbot said to me have you every thought about spreading?
i laughed and said i would rather watch grass grow! how dumb of me right and i didnt even look at them for 15 years! and that was all the great day trading years for them!! as i slugged away trying to beat the machines i outright trades.

it is still do what you are good at and comfortable with well i goota get back to work
have a great day

 

[traderking007]

I have a few clients that print money with metals spreads but they are in the LME and they are NOT in Gold vs Silver. I haven’t seen any of my clients trade GC/Si in years. I know it’s been several years for me.

i picked i tbecause i see it quoted a lot and i used the cme recommemded reduced hedge margin for the examples.
they were 1 min 5 min and 30 min i think may be 1 hour

 

[tommcginnis]

If you like mean reversion over trend, what are the advantages?

Sorry, but it's two sides of the same coin.
You can't have a trend without a varying path. (Elsewise, it would be a vector.)
You can't have mean reversion without a mean. ("Hello!")

You can't best-exploit a trend without deciding that the market has moved against it, and that mean-reversion *and* trend are in the same direction.

You can't best-exploit mean-reversion without deciding that the latest market move has pulled the market into the tails of the instant distribution, and *away*from* the longer-term trend.

One thing distinguishes here:
mean-reversion carries with it an assumption of a stable distribution from which the current sample (of prices and/or price moves) is taken, while
trend carries an explicit series -- of one observation followed by another followed by another, all clicking off of uniform delays, like the clicking of a giant clock.

The lie (the "untruth") of mean-reversion is that the observations are not linked one-to-another.
The lie (the "untruth") of trend(s) is that the degree of change is a constant.

 

[traderking007]

then again when you want to really put in the time and trust me you wont get filled on this reversion to make any money due to slippage and fees unless hft and a memeber but you can find and create charts that look like this and yes there are multimillionaires working as synthetic market makers in these markets and making money hand over fist! but you cannot and neither can I!! 15 years ago it would be you and me making the markets not the hft!!

 

[Tradex]

Dude, look at CL or ES on a Daily with RSI.

If you’re fading overbought/oversold (selling on overbought, buying on oversold) you’re getting smoked. Been that way for years now.

Where on earth did I say we should simply fade overbought/oversold RSI levels??

Mean reversion strategies based on RSI must be used with moving averages and price action, not as standalone systems.

 

[Real Money]

There is no right or wrong. Both methods work.

Yes. They do, and as was said earlier, pros use futures spreads extensively. Speculators use them for both mean reversion and trend trading. Spreading instruments will affect the mean reversion and trending behaviors.

There is an entire world of trading going on behind the scenes and between exchanges.

The guys talking shit about it are usually uninformed, unaware, or just plain ignorant.
Probably because they are uneducated in quantitative finance, derivatives pricing, and market making.

If you are a "futures trader" and don't use spreads and can't speak intelligently about them, you are ignorant about futures trading. Market makers and liquidity providers are trading them. Spread and basis trading is the vast majority of trading!

Reversion to what mean? If you mean VWAP it's all day every day. DJX VS SPX

Trending and reversion of futures spread -- Dow Jones VS Russell 2000.

Commonly traded index spread ratios with descriptions.

Large Cap / Small Cap (10*YM - 150*RTY)
Growth / Value (40*NQ - 15*YM)
Cyclicals (20*NQ - 100*RTY)
Hedged Tech (20*NQ - 50*ES)
Hedged Value (5*YM - 50*ES)

 

[bone]

Great point. I don’t think that a trader had to choose between “trending” and “mean reversion” provided he’s using confirmation. IMO, unless you have some sort of arbitrage you are pounding away at - it’s a distracting conversation but that’s my own 2 cents. YMMV.

Where on earth did I say we should simply fade overbought/oversold RSI levels??

Mean reversion strategies based on RSI must be used with moving averages and price action, not as standalone systems.

 

[traderking007]

look 70 % of all volume is the middle man hft that is 70 %
so maybe then we are left with 30 % of overall volume
our of that 30 % leftover maybe
15 % value
and 30 % mean reversion
50 % noise
its all fine and dandy you show a spread chart but none of that is going to get you to profits any faster if you just cant trade and when the spread blows out which it will and you have added and added and added

all hedgers are spreaders. if you own corn and want to hedge you sell beans so you are long physical and short futures just like cash stocks and futures this is what hft does wow.
ALL professionals spread LMFAO! funny the etf spy is not spreading is it?
90 % of mutual funds arent spreading are they
who are these professionals they are HFT now!
throwing up a bunch of charts whoa with multiple ratios.. oh wow.
my point is that none of it is any better than any of the other
it just depends on how you trade. great that we have gone down the spread hole tho lets try and get the commission and fees up now for the brokers

also you have cherry picked chart havent you???????????
i mean lets see something recent

 

[traderking007]

i am trying to understand why you are using cherry picked dates for an example no one here has ever said mean reversion doesnt exist look at his whoo hoo got reversion and this is from today in the nq!!

 

[traderking007]

i am trying to understand why you are using cherry picked dates for an example no one here has ever said mean reversion doesnt exist look at his whoo hoo got reversion and this is from today in the nq!!

todays entire nq move has been a reversion back to it smean