Most traders are probably familiar with these two main techniques- momentum trading and mean reversion.

As the names suggest, these two techniques represent two very different approaches towards trading. Momentum trading is one which you place trades on stocks which are having positive momentum in prices. High can go higher. You look out for several technical indicators to understand if a breakout has happened/going to happen from the price movement of the stocks. If yes, you will then be looking into initiating/adding your position into these stocks. In the past year, momentum trading has worked very well for tech stocks, especially Tesla.

On the contrary, mean reversion is an entirely different technique. It is one which you believe that the prices of stocks follow a certain mean. If the prices are too high, there is a certain belief that the prices will revert to the mean. The same thing happens