DEFINITION of 'Runs Test'
A statistical procedure that examines whether a string of data is occurring randomly given a specific distribution. The runs test analyzes the occurrence of similar events that are separated by events that are different.
BREAKING DOWN 'Runs Test'
For example, a list of truly random singledigit numbers should only have a few instances where a sequence of numbers is ascending numerically. However, in many cases, it is difficult to assert the randomness of data in which there are thousands of sequences in a string of data, so the runs test was created as an objective method of determining randomness.
The runs test model is important in determining whether an outcome of a trial is truly random, especially in cases where random versus sequential data has implications for subsequent theories and analysis.

Random Factor Analysis
A statistical analysis performed to determine the origin of random ... 
Data Smoothing
The use of an algorithm to remove noise from a data set, allowing ... 
Simple Random Sample
A subset of a statistical population in which each member of ... 
Random Variable
A variable whose value is unknown or a function that assigns ... 
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 ...

Trading
Random Reinforcement: Why Most Traders Fail
This phenomenon can cause a trader to abandon a proven strategy or risk everything on chance. Find out how to avoid it. 
Investing
Understanding the Simple Random Sample
A simple random sample is a subset of a statistical population in which each member of the subset has an equal probability of being chosen. 
Investing
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. 
Investing
Understanding the Random Walk Theory
The random walk theory states stock prices are independent of other factors, so their past movements cannot predict their future. 
Investing
What Are The Odds Of Scoring A Winning Trade?
Just because you're on a winning streak doesn't mean you're a skilled trader. Find out why. 
Investing
Viewing The Market As Organized Chaos
Find out how a cat and a ladybug prove markets are both random and efficient. 
Investing
Monte Carlo Simulation With GBM
Learn to predict future events through a series of random trials. 
Investing
Find The Right Fit With Probability Distributions
Discover a few of the most popular probability distributions and how to calculate them. 
Investing
Scenario Analysis Provides Glimpse Of Portfolio Potential
This statistical method estimates how far a stock might fall in a worstcase scenario. 
Investing
Intro to Stationary and NonStationary Processes
Refining data points is the key to applying financial series time data to stock analysis.

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 Answer >> 
What are the best selection methods for creating a simple random sample?
Discover some of the methods that researchers and pollsters utilize to select a simple random sample from a population group ... Read Answer >> 
What are the advantages of using a simple random sample to study a larger population?
Learn how simple random sampling works and what advantages it offers over other sampling methods when selecting a research ... Read Answer >> 
What are some examples of stratified random sampling?
Learn what simple random sampling and stratified random sampling are, some examples of stratified random samples, and how ... Read Answer >> 
When is it better to use systematic over simple random sampling?
Learn when systematic sampling is better than simple random sampling, such as in the absence of data patterns and when there ... Read Answer >> 
What is the criteria for a simple random sample?
Discover the criterion for taking a simple random sample, in contrast to a systematic random sample, each person selected ... Read Answer >>