The random walk theory is the occurrence of an event determined by a series of random movements  in other words, events that cannot be predicted. For example, one might consider a drunken person's path of walking to be a random walk because the person is impaired and his walk would not follow any predictable path. (For more, read Financial Concepts: Random Walk Theory.)
Applying the random walk theory to finance and stocks suggests that stock prices change randomly, making it impossible to predict stock prices. The random walk theory corresponds to the belief that markets are efficient, and that it is not possible to beat or predict the market because stock prices reflect all available information and the occurrence of new information is seemingly random as well.
The random walk theory is in direct opposition to technical analysis, which contends that a stock's future price can be forecasted based on historical information through observing chart patterns and technical indicators.
Academics cannot conclusively prove or agree on whether the stock market truly operates via a random walk or based on predictable trends because there are published studies that support both sides of the issue.

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 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 >> 
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 are Some Examples of Stratified Random Sampling?
Stratified random sampling divides a population into subgroups or strata, and random samples are taken, in proportion to ... Read Answer >> 
How do researchers ensure that a simple random sample is an accurate representation ...
Learn which methods researchers employ to ensure that a simple random sample best approximates the larger population being ... Read Answer >>

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
Viewing The Market As Organized Chaos
Find out how a cat and a ladybug prove markets are both random and efficient. 
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. 
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. 
Retirement
Retirees: Find the Most Walkable Cities for Relocation
When you're choosing a place to relocate when you retire, don't forget to check out its Walk Score. 
Trading
4 Ways To Predict Market Performance
There is academic evidence supporting different market views. Learn how and why the market can be predicted. 
Personal Finance
Your Mortgage: When It's Time to Walk Away
Mathematically speaking, walking away can sometimes be the most prudent choice. Find out how to run the numbers. 
Insights
What Is Market Efficiency?
The efficient market hypothesis (EMH) suggests that stock prices fully reflect all available information in the market. Is this possible?

Random Walk Index
The Random Walk Index is a technical indicator that compares ... 
Random Walk Theory
The theory that stock price changes have the same distribution ... 
Runs Test
A statistical procedure that examines whether a string of data ... 
Simple Random Sample
A subset of a statistical population in which each member of ... 
Weak Form Efficiency
One of the different degrees of efficient market hypothesis (EMH) ... 
Strong Form Efficiency
The strongest version of market efficiency. It states all information ...