Mean Reversion Mean reversion is the statistical tendency for prices, spreads, or other financial variables to return toward a long-run average after deviating from it. A mean-reverting series overshoots its mean, then corrects back -- creating predictable oscillations that can be traded. When Mean Reversion Works - Ranging markets : Sideways price action with clear support/resistance - Pairs spreads : Spread between cointegrated assets reverts to equilibrium - Oversold/overbought extremes : RSI, Bollinger Band, or z-score extremes in stationary series - Funding rate arbitrage : Perpetual fun…