A trading market in which the current price reflects all available information from past prices and volumes. In such a market, past price and volume patterns cannot provide meaningful predictions of future price movement. These minimum features describe a weak form efficient market. More stringent requirements describe semi-strong and strong forms. Efficiency is categorized by the strength of the efficiency that can be proven.
Weak Form: There are no dependencies in past price changes that a technician could use to predict future changes. Prices are a random walk.
Semi-strong Form: The current price reflects all publicly available information that might affect the price. Strong Form: The current price reflects all relevant information, whether publicly available or not. Also called Market Efficiency. See also Random Walk Hypothesis, Modern Portfolio Theory.
|
