Market Efficiency Hypothesis and Technical Analysis

Discussion in 'Trading' started by Johnny, Dec 1, 2008.

  1. Johnny


    Greetings fellows,

    In the everlasting discussion of the validity of the technical approach it seems like the market efficiency hypothesis and the use of technical analysis negate each other.

    Academic theory suggest that markets are efficient and as a consequence all analysis is useless and futile.

    The theory of technical analysis on the other hand seems to lean towards the idea of less efficient markets where the market usually takes more time to assimilate the information available and thus it is more likely that an analyst can get an edge through analysis.

    Personally, I have always thought that even though the markets may be efficient - which I think makes sense in most liquid markets today - that would mean that the study of price is still of the utmost importance.

    In other words, efficiency theory and technical analysis does not negate each other since both propose that the markets and price discount all available information.

    Without being biased, what`s your thoughts on the subject?:)
  2. John;
    Long story short;
    technical analysis is study of price & volume.

    Iwould rather wisely buy a bunch @ 80+% off sale than 50%:D ;
    especially when that has happened in the past.
    Not a prediction