Mean reversion trades profit when prices that deviate from their average snap back. Large moves of 6-7% often revert, though prices may temporarily move against you first. Exit after 1-4 days or when price returns to the mean.
It's working very well in trading in general. You have some movement and you are measuring how far the price is going from so-called mean. It could be 2%. If some asset makes very big movement like 6% or 7%, this type of movement tends to mean revert. Sometimes you are trading mean reversion and the trade continues to go against you. That's normal, that's part of the trading. And what should be your exit? Usually these mean reverting trades on the daily timeframe, they anywhere between 1, 2, 3, 4 days. So it can be something very simple as exit after X days, or if the market will get back to the mean, you get out of the market.
