Fama postulated about Efficient Market Theory through his famous publication "Random Walks in Stock Market Prices" in the 60s [1,2] The recent decade has been most interesting as TA & system trading gains spot light in the demonstration that the market is not entirely efficient. Among the many papers, books and even patents, this is just one of them "A Non-Random Walk Down Wall Street" [3,4,5] Fellow traders, what do you think and what does your experience tells you so far? Any further interesting literature to share (either camp is good for me). References: [1] http://www.ifa.com/Media/Images/PDF files/FamaRandomWalk.pdf [2] http://www.investorhome.com/emh.htm [3] http://www.amazon.com/gp/product/0691092567/102-7119293-8268933?v=glance&n=283155&v=glance [4] http://pup.princeton.edu/books/lo/ [5] http://www.pupress.princeton.edu/titles/5904.html
Definitely not random. If it were, why would there be any incentive to trade the market? It would be like flipping a coin. Order within chaos
Ah... Chaos Theory [1,2] [1] http://en.wikipedia.org/wiki/Chaos_theory [2] "Order within Chaos" http://www.amazon.com/gp/product/0471849677/102-7119293-8268933?v=glance&n=283155&v=glance
Its random or very near to. But not efficient. Think about it if it was efficient there would be no trade Volatility would be close to zero.
It has been since about 1945 and an impressive line of "academics" lost their pants in the market, with or without random walk.