Noise

AAA

DEFINITION of 'Noise'

Price and volume fluctuations in the market that can confuse one's interpretation of market direction. Used in the context of equities, it is stock market activity caused by program trading, dividend payments or other phenomena that is not reflective of overall market sentiment. Also known as "market noise".

INVESTOPEDIA EXPLAINS 'Noise'

In general, the shorter the time frame, the more difficult it is to separate the meaningful market movements from the noise. Noise traders attempt to take advantage of market noise by entering buy and sell transactions without the use of fundamental data.

RELATED TERMS
  1. Bull

    An investor who thinks the market, a specific security or an ...
  2. Bear

    An investor who believes that a particular security or market ...
  3. Fundamental Analysis

    A method of evaluating a security that entails attempting to ...
  4. Market Sentiment

    The overall attitude of investors toward a particular security ...
  5. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  6. Noise Trader

    The term used to describe an investor who makes decisions regarding ...
Related Articles
  1. Active Trading

    Trading Without Noise

    False signals can drown out underlying trends. Find out how to tone them down and tune them out.
  2. Forex Education

    Confirm Forex Momentum With Heikin Ashi

    Heikin Ashi smooths trends and makes them easier to identify.
  3. Retirement

    The Essentials Of Corporate Cash Flow

    Tune out the accounting noise and see whether a company is generating the stuff it needs to sustain itself.
  4. Options & Futures

    Maximize Profits With Volatility Stops

    Find out which type of volatility stop fits your trading objectives.
  5. Investing

    Do noise traders have any long-term effect on stock prices?

    There are two theories that are used to describe how securities are priced in the stock market: the efficient market hypothesis (EMH) and the inefficient market hypothesis. The EMH states that ...
  6. Options & Futures

    Gauging Major Turns With Psychology

    Knowing what the market is thinking is the best way to determine what it will do next.
  7. Options & Futures

    Testing Point-And-Figure Patterns

    Learn the patterns that will help you pinpoint and profit from breakouts.
  8. Charts & Patterns

    A Look At Kagi Charts

    This relatively unknown tool could help you find an asset's trend faster.
  9. Active Trading

    Multiple Time Frames Can Multiply Returns

    Short-term and intermediate charts complement the underlying trend and refine entries and exits.
  10. What's a Marketable Security?
    Active Trading

    What's a Marketable Security?

    Marketable securities are financial instruments that can be readily bought and sold in a public market. The key feature is the ease with which it can be sold and converted into cash. Usually, ...

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center