subject: Can information theory help us better understand market price behavior? [print this page] I have difficulty understanding how discretionary traders can make money on a consistent basis. Discretionary traders not only have to figure out what direction prices are going to move, but they also have to determine if the news is expected or unexpected. This is why we see the market move so much when economic figures or earnings are released that differ from the consensus opinion. Consensus is synonymous with expected. Relating the actual figure to the consensus number is another aspect that a discretionary trader has to take into account. Then, if that is not hard enough, the discretionary trader has to figure how far and in what timeframe prices will move. Is it not better to trade the market systematically? I think so.
Can information theory help us better understand market price behavior?
