# Monte Carlo Mean Reversion Heatmap Projects 100+ simulated price paths as a forward probability heatmap and scores how many revert to an EMA within the window, turning 'price looks stretched' into a measurable percentage. Percentile lines at 5, 50, and 95 frame statistical extremes. For mean-reversion and volatility traders who want odds instead of opinions. - Indicator in the LuxAlgo Library, by LuxAlgo, published Feb 17, 2026. - Access: free. - Concepts: [Monte Carlo Price Paths](https://www.luxalgo.com/library/concept/monte-carlo-price-paths/) (primary), [Probability Cones](https://www.luxalgo.com/library/concept/probability-cones/) - Open on Vela: https://vela.luxalgo.com/chart?pineScriptCodeId=cmpwn3sjy005bvhsgxbq2ht2s - Page: https://www.luxalgo.com/library/indicator/monte-carlo-mean-reversion-heatmap/ The **Monte Carlo Mean Reversion Heatmap** turns "price looks stretched" into a number. It projects a forward probability cloud from 100+ [simulated price paths](https://www.luxalgo.com/library/concept/monte-carlo-price-paths/) (Geometric Brownian Motion runs built from historical log-volatility, with optional drift taken from the EMA slope) and counts how many of those paths touch or cross the EMA ribbon inside the projection window, reported as a Mean Reversion % on its dashboard. ## How to Trade the Monte Carlo Mean Reversion Heatmap? - **Mean Reversion % above 70**: statistical overextension, conditions that favor counter-trend setups targeting a return to the mean. - **Below 30**: strong drift or elevated volatility; short-term reversion is unlikely, as in parabolic or breakout phases. - **Beyond the 5% or 95% percentile line**: price sits in territory reached in roughly one of twenty modeled scenarios, a profit-taking and exhaustion watchlist, not an automatic fade. - **The 50% median path**: the most probable trajectory, a realistic trend target and a benchmark for whether price is out- or under-running expectations. - **Heatmap shading**: darker zones hold more simulated paths; narrow clouds signal controlled volatility, wide ones elevated dispersion. ## Monte Carlo Mean Reversion Heatmap Settings - **Mean Length**: the EMA period used as the reversion target: shorter for fast strategies, longer for swing horizons. - **Simulations**: number of random paths; more improves statistical smoothness at a performance cost. - **Projection Length / Volatility Lookback**: the forward window and the history used to estimate volatility. - **Include Drift**: folds the EMA slope into the simulation; disabled, the model runs as a pure volatility random walk. - **Price Bins**, **Show Percentile Lines**, and dashboard controls handle resolution and display. ## Frequently Asked Questions ### Does the projection repaint? Each projection is built from the volatility and drift measured at that bar, and the cloud represents the forward distribution implied by that data. As fresh bars update those inputs, fresh projections follow. ### When should I prefer the Expected Move Distribution? Reach for the [Monte Carlo Expected Move Distribution](https://www.luxalgo.com/library/indicator/monte-carlo-expected-move-distribution/) when the question is how far price can travel rather than whether it will come back: it maps the full projected range, while this heatmap specializes in reversion odds. Both sit in the library's [statistics family](https://www.luxalgo.com/library/family/statistics/). ### Where can I get the Monte Carlo Mean Reversion Heatmap? Access is free on the LuxAlgo Library. You can also launch it inside Quant, our coding agent, directly from the page to see the reversion statistics on your own instruments. You can also copy the source code from this page and run it anywhere Pine Script® runs. ## Related indicators - [Monte Carlo Shuffled Projection](https://www.luxalgo.com/library/indicator/monte-carlo-shuffled-projection/) (Monte Carlo Price Paths): markdown at https://www.luxalgo.com/library/indicator/monte-carlo-shuffled-projection.md - [Monte Carlo Expected Move Distribution](https://www.luxalgo.com/library/indicator/monte-carlo-expected-move-distribution/) (Monte Carlo Price Paths): markdown at https://www.luxalgo.com/library/indicator/monte-carlo-expected-move-distribution.md - [Predictive Monte Carlo Engine](https://www.luxalgo.com/library/indicator/predictive-monte-carlo-engine/) (Monte Carlo Price Paths): markdown at https://www.luxalgo.com/library/indicator/predictive-monte-carlo-engine.md - [Anchored Monte Carlo Shuffled Projection](https://www.luxalgo.com/library/indicator/anchored-monte-carlo-shuffled-projection/) (Monte Carlo Price Paths): markdown at https://www.luxalgo.com/library/indicator/anchored-monte-carlo-shuffled-projection.md - [Probability Grid](https://www.luxalgo.com/library/indicator/probability-grid/) (Probability Cones): markdown at https://www.luxalgo.com/library/indicator/probability-grid.md - [3D Opportunity Cone](https://www.luxalgo.com/library/indicator/3d-opportunity-cone/) (Probability Cones): markdown at https://www.luxalgo.com/library/indicator/3d-opportunity-cone.md - [Spline Quantile Regression Channel](https://www.luxalgo.com/library/indicator/spline-quantile-regression-channel/) (Statistics): markdown at https://www.luxalgo.com/library/indicator/spline-quantile-regression-channel.md - [Precision Market Entropy Heatmap](https://www.luxalgo.com/library/indicator/precision-market-entropy-heatmap/) (Statistics): markdown at https://www.luxalgo.com/library/indicator/precision-market-entropy-heatmap.md --- Source: https://www.luxalgo.com/library/indicator/monte-carlo-mean-reversion-heatmap/ (LuxAlgo Library). Free to use with attribution: https://www.luxalgo.com/library/license/