Interpreting Non-Random Price Movements
Published at : June 07, 2022
The financial markets are frequently depicted as chaotic environments with high levels of complexity and volatility. This hints at an element of surprise. Despite this, a substantial body of research has been conducted to generate solid predictions due to the importance of these markets in the economic system.
Making accurate predictions is a critical component of the financial markets. A market is efficient when arbitrage is possible to the fullest extent. Inefficiency implies that there are unexploited profit chances, and, of course, traders will promptly open long or short positions until there is no longer a chance of profit. Trading based on an information set will not produce profits if the market is considered inefficient.
Traders use many tools to understand and analyze the randomness of the markets. There are certain times that an asset exhibits non-random behavior. When these times occur, we need to interpret what price is doing.
Understanding retracements and reversals can help us during this period to earn profits.
Please watch, learn, comment & subscribe @Investor Trading Academy
Making accurate predictions is a critical component of the financial markets. A market is efficient when arbitrage is possible to the fullest extent. Inefficiency implies that there are unexploited profit chances, and, of course, traders will promptly open long or short positions until there is no longer a chance of profit. Trading based on an information set will not produce profits if the market is considered inefficient.
Traders use many tools to understand and analyze the randomness of the markets. There are certain times that an asset exhibits non-random behavior. When these times occur, we need to interpret what price is doing.
Understanding retracements and reversals can help us during this period to earn profits.
Please watch, learn, comment & subscribe @Investor Trading Academy
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