Showing posts from February, 2017

Meanreversion and Breakout research on the EURUSD

Mean reversion and Breakout strategy combo Below is a snapshot of some trading research I have been doing. By no means this is a trade-able strategy as is, but it does show two of the basic trading principles: Mean reversion This is the principle that price tends to return to it's mean after it has moved away from it.  Breakout This is the principle that price tends to break away once it has moved more then a certain percentage usually after a period of consolidation. The mean reversion strategy The strategy that I researched is simple. If the EURUSD moves up by more then 0.5% in one day, then the next day we will go short and close the position by the end of day. And vice versa if the price moves down by more then 0,5%, then we go long and close the position again at the next day's close. The break out strategy The researched strategy again is very simple. When price moves up by more then 1% in a day, we go long the next day until the close of the next da