# Mean Reversion

> Trade price extremes back toward the statistical mean using z-scores, Bollinger Bands, and RSI. Use when price is overextended from its average in ranging markets, or when identifying exhaustion at extremes.

- **Type:** Skill
- **Install:** `agentstack add skill-ske-labs-agent-trading-skills-mean-reversion`
- **Verified:** Yes — security-reviewed for prompt injection and unsafe behavior
- **Seller:** [SKE-Labs](https://agentstack.voostack.com/s/ske-labs)
- **Installs:** 0
- **Category:** [Agent Skills](https://agentstack.voostack.com/c/agent-skills)
- **Latest version:** 0.1.0
- **License:** Apache-2.0
- **Upstream author:** [SKE-Labs](https://github.com/SKE-Labs)
- **Source:** https://github.com/SKE-Labs/agent-trading-skills/tree/main/skills/technical-strategies/mean-reversion

## Install

```sh
agentstack add skill-ske-labs-agent-trading-skills-mean-reversion
```

Requires the [AgentStack CLI](https://agentstack.voostack.com/docs/cli). Works with Claude Code, Cursor, and any MCP-compatible agent.

## About

# Mean Reversion

Price tends to revert to its statistical mean after moving to extremes. Mean reversion profits from buying oversold and selling overbought in ranging markets.

## Detection Methods

### Z-Score

`Z-Score = (Price - SMA) / Standard Deviation`. Enter at |Z| > 2.0, target Z = 0 (the mean).

| Z-Score | Signal |
| --- | --- |
| > +2.0 | Strongly overbought → sell/short |
| -1.0 to +1.0 | Normal → no signal |
| 75 = deeply overbought (sell).

## Regime Filter (Critical)

| ADX | Mean Reversion? |
| --- | --- |
|  25 | **No** — trending, skip |

## Workflow

1. **Check regime** (must pass first):
   ```
   get_indicators(indicator_code="dmi", symbol=, exchange=, interval=)
   ```
   ADX > 25 → stop. Mean reversion not applicable.

2. **Get BB and RSI**:
   ```
   get_indicators(indicator_code="bbands", symbol=, exchange=, interval=)
   get_indicators(indicator_code="rsi", symbol=, exchange=, interval=)
   get_indicators(indicator_code="ema", symbol=, exchange=, interval=)
   ```

3. **Get candles** for confirmation:
   ```
   get_candles_around_date(symbol=, exchange=, interval=, date=)
   ```

4. **Mark setup**:
   ```
   draw_chart_analysis(action="create", drawing={
       "type": "demand",
       "points": [
           {"time": , "price": },
           {"time": , "price": }
       ],
       "options": {"text": "Mean Reversion Buy (RSI: 22, Z: -2.3)"}
   })
   ```

5. **Targets**: conservative = middle band (~65% WR), standard = 75% to middle (~55%), aggressive = opposite band (~35%)

## Key Rules

- NEVER use mean reversion in trending markets (ADX > 25); "oversold" in a downtrend gets more oversold
- NEVER enter on BB touch alone; require confirmation candle (engulfing, hammer, doji)
- NEVER hold for opposite band as the plan; middle band (SMA) is the realistic target
- NEVER ignore BB Width squeeze (<20th pctl); a breakout is coming and mean reversion will fail
- Require 2+ confirming signals (BB + RSI + Z-Score) for entry
- If price is at lower BB due to fundamental repricing (earnings, news), it is not "oversold"

## Related Skills

- **bollinger-bands** — BB touches are the primary visual mean reversion signal
- **market-regime-detection** — ADX must confirm ranging market before any mean reversion trade

## Source & license

This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.

- **Author:** [SKE-Labs](https://github.com/SKE-Labs)
- **Source:** [SKE-Labs/agent-trading-skills](https://github.com/SKE-Labs/agent-trading-skills)
- **License:** Apache-2.0

Install and usage instructions live in the source repository linked above.

## Pricing

- **Free** — Free

## Security capabilities

Automated source analysis of v0.1.0 — what this tool can access:

- **Network access:** no
- **Filesystem access:** no
- **Shell / process execution:** no
- **Environment & secrets:** no
- **Dynamic code execution:** no

*"Yes" means the capability is present in the source — more access means more to trust, not that it is unsafe.*


## Versions

- **0.1.0** — security scan: passed — Imported from the upstream source.

## Links

- Listing page: https://agentstack.voostack.com/l/skill-ske-labs-agent-trading-skills-mean-reversion
- Seller: https://agentstack.voostack.com/s/ske-labs
- Browse the marketplace: https://agentstack.voostack.com/browse

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