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.
BREAKING DOWN '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 ... 
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 ... 
Random Walk Theory
The theory that stock price changes have the same distribution ...

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. 
Mutual Funds & ETFs
Top 3 Muni California Mutual Funds
Discover analyses of the top three California municipal bond mutual funds, and learn about their characteristics, historical performance and suitability. 
Chart Advisor
4 European Stocks to Consider Buying
European companies, listed on US exchanges, that are providing buying opportunities right now. 
Investing Basics
What Does In Specie Mean?
In specie describes the distribution of an asset in its physical form instead of cash. 
Economics
Calculating Cross Elasticity of Demand
Cross elasticity of demand measures the quantity demanded of one good in response to a change in price of another. 
Chart Advisor
ChartAdvisor for October 2 2015
Weekly technical summary of the major U.S. indexes. 
Investing
How Diversifying Can Help You Manage Market Mayhem
The recent market volatility, while not unexpected, has certainly been hard for any investor to digest.

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The random walk theory is the occurrence of an event determined by a series of random movements  in other words, events ... Read Full Answer >> 
Is Colombia an emerging market economy?
Colombia meets the criteria of an emerging market economy. The South American country has a much lower gross domestic product, ... Read Full Answer >> 
What are some of the most common technical indicators that back up Doji patterns?
The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >> 
Tame Panic Selling with the Exhausted Selling Model
The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >> 
Point and Figure Charting Using Count Analysis
Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... 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 >>