Efficient market theory

[It's Snake Pliskin]

Can anyone explain what efficient market theory is and how it applies to investing in the stock market?

[tech/a]

Tina here it is explained.

So out with the dart board.

http://www.investopedia.com/university/concepts/concepts6.asp

[It's Snake Pliskin]

Thanks Tech!

Yes, the dart board is certainly applicable here. :D

[Milk Man]

yeah-

flies in the face of logic. basically implies the stockmarket is one big insider trading racket or that everyone invested has a working crystal ball. all you have to do to dismiss that theory is look at skasey's old company. lots of value built into that price?

[nhojmabon]

There are many theory's about how to make good money in the stock market, not only should you buy the right shares, you should also sell your shares at a specific point (does vary on different theories).
If you want to be efficient you need to learn how to apply proper money management, learn to always stick to your goals and become as best you can in the art of technical analysis.

There is no "one perfect theory", even advanced traders do lose money but they cut their loses and ride the rising trends, this is one example.

Remember buying the shares are only a tiny fraction of whats required to become an efficient trader.

Oh yeah, I would totally dissagree with that dart board theory, technical analysis does work when in the right hands, although if you are randomly choosing shares then you are "throwing a dart at a dartboard".

Happy trading :)