Weak Form Efficiency

AAA

DEFINITION of 'Weak Form Efficiency'

One of the different degrees of efficient market hypothesis (EMH) that claims all past prices of a stock are reflected in today's stock price. Therefore, technical analysis cannot be used to predict and beat a market.

INVESTOPEDIA EXPLAINS 'Weak Form Efficiency'

Theoretical in nature, weak form efficiency advocates assert that fundamental analysis can be used to identify stocks that are undervalued and overvalued. Therefore, keen investors looking for profitable companies can earn profits by researching financial statements.

RELATED TERMS
  1. Semi-Strong Form Efficiency

    A class of EMH (Efficient Market Hypothesis) that implies all ...
  2. Strong Form Efficiency

    The strongest version of market efficiency. It states all information ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Random Walk Theory

    The theory that stock price changes have the same distribution ...
  5. Efficient Market Hypothesis - EMH

    An investment theory that states it is impossible to "beat the ...
  6. Fundamental Analysis

    A method of evaluating a security that entails attempting to ...
Related Articles
  1. Active Trading Fundamentals

    Is Your Psyche Ready For A Bull Market?

    Not all investors are mentally prepared for when a much-awaited bull market finally comes charging in.
  2. Active Trading

    What Is Market Efficiency?

    The efficient market hypothesis (EMH) suggests that stock prices fully reflect all available information in the market. Is this possible?
  3. Fundamental Analysis

    Monte Carlo Simulation With GBM

    Learn to predict future events through a series of random trials.
  4. Technical Indicators

    Why is the 200 Simple Moving Average (SMA) so common for traders and analysts?

    Learn about the 200 simple moving average (SMA), how it is utilized by traders and analysts, and why it is considered to represent major support or resistance.
  5. Trading Strategies

    How do I build a profitable strategy when spotting a Three White Soldiers pattern?

    Learn a simple trading strategy implemented based on the bullish market reversal signal given by the three white soldiers candlestick pattern.
  6. Trading Strategies

    How are Three Black Crows patterns interpreted by analysts and traders?

    Understand the basics of the three black crows pattern and how analysts and traders interpret this bearish reversal pattern when creating a trading strategy.
  7. Trading Strategies

    How effective is creating trade entries after spotting a Symmetrical Triangle pattern?

    Understand the symmetrical triangle pattern and the likely success of the most common breakout trading strategy implemented when the pattern is identified.
  8. Forex Strategies

    How do I implement a forex strategy when spotting a Rounding Bottom Pattern?

    Understand the key factors to implementing a profitable forex trading strategy based on recognizing the formation of a rounding bottom pattern.
  9. Trading Strategies

    How are Stick Sandwich patterns interpreted by analysts and traders?

    Understand the basics of the stick sandwich candlestick pattern and how this reversal signal is interpreted by analysts and traders.
  10. Trading Strategies

    How effective is creating trade entries after spotting a Three Black Crows pattern?

    Understand the basics of the three black crows candlestick pattern and how this reversal signal is used for the creation of effective trade strategy.

You May Also Like

Hot Definitions
  1. Multiplier Effect

    The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends ...
  2. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  3. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  5. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  6. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
Trading Center