Mean reversion vs trend following: which is better?

Mean reversion fades extremes, betting on a snap-back to fair value. Trend following does the opposite, joining established moves and betting on continuation. One sells what's strong; the other buys it. They cannot both be right about the same move — and they're not meant to be.

Opposite win-rate profiles

Mean reversion typically wins often with smaller winners (most fades revert a little), but suffers occasional large losses when a trend runs through it. Trend following wins rarely with large winners (most trends fail to develop), suffering many small losses. Both can have positive expectancy — they just feel completely different to trade, which is why temperament matters.

Opposite regimes — the key

Mean reversion's best market (a balanced range) is trend following's worst, and vice versa. This is the entire argument against picking one and marrying it: markets cycle between ranging and trending unpredictably, so a single-philosophy trader endures long stretches where their approach simply doesn't work — and that's exactly when most people abandon a sound strategy.

Why combining them wins

Because their strengths and weaknesses are inversely correlated, running a mean-reversion strategy and a continuation strategy together smooths the equity curve: when one is in its bad regime, the other is often in its good one. That's the core logic of a multi-strategy portfolio. The “better” answer is usually “both, applied systematically” — each taken with the consistency that lets its edge survive its bad stretch.