DEFINITION of 'Entropy'
A mathematical measurement of the degree of uncertainty of a random variable. Entropy in this sense is essentially a measure of randomness. It is typically used by financial analysts and market technicians to determine the chances of a specific type of behavior by a security or market.
INVESTOPEDIA EXPLAINS 'Entropy'
Entropy has long been a source of study and debate by market analysts and traders. It is used in quantitative analysis, and can help predict the probability that a security will move in a certain direction or according to a certain pattern. Volatile securities have greater entropy than stable ones that remain relatively constant in price. The concept of entropy is explored in "A Random Walk Down Wall Street."

Volatility Ratio
A technical indicator used to identify price ranges and breakouts. ... 
Volatility
1. A statistical measure of the dispersion of returns for a given ... 
LogNormal Distribution
A statistical distribution of random variables which have a normally ... 
Random Walk Theory
The theory that stock price changes have the same distribution ... 
Volatility Quote Trading
A method of quoting option contracts whereby bids and asks are ... 
Treynor Ratio
A ratio developed by Jack Treynor that measures returns earned ...

What is the "random walk theory" and what does it mean for investors?
The random walk theory is the occurrence of an event determined by a series of random movements  in other words, events ... Read Full Answer >> 
What assumptions are made when conducting a ttest?
The common assumptions made when doing a ttest include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >> 
What is the utility function and how is it calculated?
In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >> 
How are double exponential moving averages applied in technical analysis?
Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >> 
How do you know where on the oscillator you should make a purchase or sale?
Common oscillator readings to consider making a buy or sale are below 20 or above 80, respectively. More aggressive investors ... Read Full Answer >> 
What are some of the more common types of regressions investors can use?
The most common types of regression an investor can use are linear regressions and multiple linear regressions. Regressions ... Read Full Answer >>

Markets
The Uses And Limits Of Volatility
Check out how the assumptions of theoretical risk models compare to actual market performance. 
Investing Basics
The Five Biggest Stock Market Myths
Stocks that go down must come up, right? Wrong. We bust this myth and four other common market misconceptions. 
Fundamental Analysis
Financial Markets: Random, Cyclical Or Both?
Are the markets random or cyclical? It depends on who you ask. Here, we go over both sides of the argument. 
Active Trading
Viewing The Market As Organized Chaos
Find out how a cat and a ladybug prove markets are both random and efficient. 
Fundamental Analysis
Explaining Price Targets
A price target is what an investment analyst projects a security’s future price to be. 
Fundamental Analysis
Present Value Interest Factor of Annuity (PVIFA)
PVIFA can be used to calculate the present value of a series of annuities by considering cash flows and depreciation. 
Economics
What's a Centrally Planned Economy?
A centrally planned economy is one where the government controls the country’s supply and demand of goods and services. 
Economics
What are Barriers to Entry?
A barrier to entry is any obstacle that restricts or impedes a company’s efforts to enter an industry. 
Chart Advisor
ChartAdvisor for July 30 2015
Weekly technical summary of the major U.S. indexes. 
Mutual Funds & ETFs
ETF Analysis: SPDR S&P 500 Trust
Find out more about the SPDR S&P 500 ETF Trust, the characteristics of the exchange traded fund and the suitability of investing in the fund.