Forex
EdgeForex9 min read

Mean Reversion in the Majors, and the Regime That Ends It

Currency pairs range far more often than they trend. The exception is expensive.

The base rate

Major pairs spend the majority of their time in ranges bounded by recent volatility, because central banks on both sides of the pair are managing toward stability. A strategy that fades extension within a range wins often and by small amounts.

The regime break

When one central bank changes course, the range stops being a range and the fade becomes a series of losses in one direction. The distribution is the mirror of carry: many small wins, occasional large losses. Position sizing that assumes symmetric outcomes will be wrong at exactly the wrong time.

Automating the off switch

The useful automation is not the entry logic — it is a regime detector that stops the strategy trading when realised volatility or rate expectations move outside the band the strategy was fitted on. A mean-reversion system without a regime gate is a system that will eventually meet a trend.

Educational, not directive. This is analysis of how a market behaves, not a recommendation to act in it. Strategy detail with conviction scoring and live sample sizes lives in the vault.
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