Guidebook No. 3 of the Samxon Market Indicator Series. An 11-page PDF guide by Paul Samson (Samxon.ca).

Reversion to the mean is one of the oldest and most dependable ideas in market analysis, and one of the most misused. The common mistake is treating the mean as a fixed price the market must return to. This guidebook shows that the mean moves with the trend, and only changes direction when the market prints a swing point that breaks the trend.

Inside:

• What the mean, the stretch and the pull are
• How the mean follows the trend line
• The three steps by which a swing point changes the mean
• The two ways a stretch resolves: the snapback and the time catch-up
• How to measure the stretch, and five ways traders put reversion to work
• A full cycle walked through bar by bar

The central idea: a pull back to a rising mean is a buying opportunity, until a swing point turns the mean around. Knowing the difference separates healthy pull backs from a market that is falling apart.

Instant PDF download. For educational purposes only; not financial advice.