That is a fair point. Sometimes, large moves don't necessarily mean revert if something has fundamentally changed.
The way to deal with that is through position sizing. I.e. if you don't believe that there is a regime change, you take on a mean-reversion trade with large sizing (confidence).
If you believe there COULD be a regime change, you take on the mean-reversion trade with small sizing (less confidence).
your focus on mean re version trade somehow down plays risks of regime changes, where deviations may not necessarily lead to mean re version.
That is a fair point. Sometimes, large moves don't necessarily mean revert if something has fundamentally changed.
The way to deal with that is through position sizing. I.e. if you don't believe that there is a regime change, you take on a mean-reversion trade with large sizing (confidence).
If you believe there COULD be a regime change, you take on the mean-reversion trade with small sizing (less confidence).