Trend vs. Mean Reversion strategies

Mean reversion is the more intuitive approach – you would think that if price goes down, it's likely to come up, and vice versa.

But after years of actually analyzing market patterns, I actually found that trend is the easier way to trade.

Sure, it is not intuitive.

But generally, price moves tend to occur in bursts. And this can be observed empirically as well.

Volatility tends to cluster in one direction or another. That's why vol spikes can be so brutal in market crashes – all the vol happens in one go.

Similar for intraday trend – most of the volatility happens in only one direction.

Don't believe me?

Look at the last few weeks of chart data. It's rare to find an instance of price hard reversing intraday – if it moves 1%+ in one direction it will usually continue in that direction.

Not always, of course. There are caveats.

But it's where I started when I made the strategy I trade.