ABSTRACT
The past three decades have seen many studies of market efficiency. A substantial number of these studies has focused on technical analysis. Section 2A discusses various concepts of market efficiency as well as the basic ideas behind technical analysis. We place much of our emphasis on equity markets because the bulk of the literature concerns these intensively studied markets. Several tests used in the literature are discussed—particularly random walk and runs tests—and their pros and cons. We argue that technical analysis is perhaps a better way to test for market efficiency. Section 2B is a review of the literature on tests of market efficiency in spot exchange markets, focusing particularly on technical analysis in these markets. Section 2C is a summary.
