Mean Reversion

Mean Reversion captures the tendency of asset prices to move back toward their average after extreme moves. When NSE stocks or futures deviate sharply from their typical range, this strategy assumes they're more likely to reverse than continue, creating a tradeable edge.

NSE's high liquidity in large-cap stocks and index futures makes mean reversion particularly effective. The market experiences distinct intraday volatility patterns, especially around market open and during volatile sessions, when oversold and overbought conditions frequently reverse within the same day. This daily timeframe suits traders who want to avoid overnight gaps while capturing these mean-reverting price action patterns.

The strategy uses the Relative Strength Index to identify extremes. An RSI reading below 30 suggests oversold conditions where buying pressure typically emerges, while readings above 70 flag overbought territory where selling interest tends to return. The setup waits for price to push into these extreme zones on RSI, then enters when early reversal signals appear, betting on the stock or futures contract returning toward its equilibrium.

This approach works well in the equity and futures segments where NSE provides sufficient volume and tight spreads to execute entries and exits without slippage.

This Beginner strategy suits Beginner Traders comfortable with a Daily timeframe and holding periods around 2–8 days. It's built for the Equity, Futures segment on NSE, so it fits traders who can check positions without needing intraday execution speed. Because it uses a small, well-known set of indicators, it's a reasonable starting point if you're new to systematic NSE trading.