Mean reversion is a financial theory suggesting that asset prices and historical returns eventually move back toward the mean or average over time. Traders using this concept identify assets that have deviated significantly from their historical price levels and bet on a return to normalcy. Indicators like Bollinger Bands and the Relative Strength Index (RSI) help detect overbought or oversold conditions. Mean reversion works best in sideways or range-bound markets and is less effective during strong trending conditions. It requires patience and discipline, as timing the reversal can be challenging. This strategy is widely used by quantitative analysts and is valued for its logical foundation in statistical behavior and market cycles.