Mean reversion is a financial theory that states that historical asset prices and returns tend to move toward their long-term average levels. The average level can be in the context of general economic growth, the return of an underlying industry, or any particular data set. This means that over time, prices will fluctuate around the average price, and the further away from the average, the more likely it is that prices will return to it.
Every trading strategy is based on exploiting either mean reversion or momentum in the market. Financial markets spend more time in consolidation mode than in trend phases. Incorporating a reversion strategy into your trading activity is very important and potentially profitable.