random walk theory
Definition
Stockmarket analysis theory that stock prices (and the capital markets in general) follow a pattern-less (random) path such as that of a drunkard's walk. Therefore, their future course is unpredictable and the best forecast of a stock's price is equal to its present value plus an unpredictable negative or positive random error. Proposed in 1900 by the French mathematician Louis Bacheiler it is explained as a Markov process, and is an antithesis of technical analysis. See also Brownian motion.
random walk theory is in the Banking, Commerce & Finance, Investing and Securities & Futures Trading subjects.
random walk theory appears in the definition of the following term: Markov process
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