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The efficient market hypothesis posits that stock prices are a function of information and rational expectations, and that newly revealed information about a company's prospects is almost immediately reflected in the current stock price. This would imply that all publicly known information about a company, which obviously includes its price ...
Their book A Non-Random Walk Down Wall Street, presents a number of tests and studies that reportedly support the view that there are trends in the stock market and that the stock market is somewhat predictable. [12] One element of their evidence is the simple volatility-based specification test, which has a null hypothesis that states:
This analysis tool was used both, ... These indicators are based on statistics derived from the broad market. ... Richard W. Stock Market Theory and Practice, 2011.
The triggering event was the stock market crash of 1987. This was the first major financial crisis in which a lot of academically-trained quants were in high enough positions to worry about firm-wide survival. [1] The crash was so unlikely given standard statistical models, that it called the entire basis of quant finance into
He was able to create a system, known broadly as card counting, which used probability theory and statistical analysis to successfully win blackjack games. [7] His research was subsequently used during the 1980s and 1990s by investment management firms seeking to generate systematic and consistent returns in the U.S. stock market. [7]
Candlestick charts are a visual aid for decision making in stock, foreign exchange, commodity, and option trading. By looking at a candlestick, one can identify an asset's opening and closing prices, highs and lows, and overall range for a specific time frame. [7] Candlestick charts serve as a cornerstone of technical analysis.
Fibonacci retracement is a popular tool that technical traders use to help identify strategic places for transactions, stop losses or target prices to help traders get in at a good price. The main idea behind the tool is the support and resistance values for a currency pair trend at which the most important breaks or bounces can appear.
Beta is the hedge ratio of an investment with respect to the stock market. For example, to hedge out the market-risk of a stock with a market beta of 2.0, an investor would short $2,000 in the stock market for every $1,000 invested in the stock. Thus insured, movements of the overall stock market no longer influence the combined position on ...
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