Financial Times Guide to Technical Analysis

Conclusion: leave the random walkers busy with their arguments – the market technicians are busy making money

What topics are covered in this conclusion?

• random walk theory

What are the objectives?

• To ascertain that prices may not be random and may have trends.
• To show that mechanical trading systems, like the moving average procedure for timing purchases and sales, are better than a passive buy-and-hold policy.

Introduction

There is a third school of thought, advocated by academics like Fama (1965), which believes that no investor can achieve excess return above the benchmark return from the buy-and-hold policy based on the knowledge of historical price patterns. Random walk theory generally states that knowing past price history does ...