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Glossary

Random walk theory

Investment theory which assumes that price movements are unpredictable.

According to the random walk theory, the predictability of price developments is not possible since e.g. the price of a share depends on data of future events of which one does not know when they will occur, in whatever form they occur, and what they will cause when they occur. Unlike technical analysis, the random walk theory assumes that historical security prices will not be relevant regarding future price developments.

Synonym
Technical analysis

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