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Momentum and Mean-Reversion as Broad Stock Strategy Families

Article Quant Q&A · Author: kefeizhou
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Summary

The document gives a brief answer to a question about stock-only trading strategies using freely available online data. It groups strategies into two broad families: momentum, including trend-following, and mean reversion. It also points readers toward books on trading methods and on the evidential limitations of technical analysis.

The answer does not describe a specific signal, data source, entry or exit rule, or method for testing a strategy. It supplies no performance figures or worked examples. Its main practical lesson is a high-level taxonomy, paired with a caution that familiar technical approaches should be assessed critically rather than assumed to work. The references are mentioned without summaries, so the document alone cannot establish what evidence they contain or which strategy might suit a particular stock universe.

Key ideas

  • The answer identifies momentum and mean reversion as broad categories of stock trading strategies.
  • Trend-following is given as an example within the momentum family.
  • The response points to critical evaluation of technical-analysis claims but provides no tests or performance evidence.
  • No specific data source, trading rule, or implementation method is supplied.

Tags

EquitiesMomentumMean reversionTrend following
Full text
# basic stock trading strategies


# basic stock trading strategies












What are some trading strategies for stocks (just stocks, no derivatives) using freely available online data sources?

## Answer by glyphard (score 3)

https://quant.stackexchange.com/a/288

There are two broad categories of trading strategies.

- Momentum strategies(e.g trend following)

- Mean reversion strategies.

Elder's book outlines the major ones: http://www.amazon.com/Trading-Living-Psychology-Tactics-Management/dp/0471592242

And the depressing truth about most of these strategies is outlined by Aronson: http://www.amazon.com/Evidence-Based-Technical-Analysis-Scientific-Statistical/dp/0470008741/

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.