Sizing

Just because mean reversion strategies seek price retracements doesn't mean you can ignore risk management; you must size positions to avoid catastrophic drawdowns and the silent threat of a martingale-like escalation. You will learn practical, statistically grounded rules that limit leverage, cap position growth after losses, and prioritize capital preservation, so your system survives bad runs and compounds gains responsibly. Keep rules simple, measurable, and aligned with volatility to control tail risk and maintain consistency.Understanding Mean Reversion Definition of Mean Reversion Mean reversion describes when a price series or spread tends to move back toward its long-term average after deviating…