Fractal Market Hypothesis

Fractal Market Hypothesis

The fractal market hypothesis states that (1) a market consists of many investors with different investment horizons, and (2) the information set that is important to each investment horizon is different. As long as the market maintains this fractal structure, with no characteristic time scale, the market remains stable. When the market's investment horizon becomes uniform, the market becomes unstable because everyone is trading based upon the same information set. Theory due to Ed Peters.
References in periodicals archive ?
5] Anderson, N and J Noss, 'The Fractal Market Hypothesis and its implications for the stability of financial markets', Bank of England Financial Stability Paper No.
18] Peters, E, Fractal Market Hypothesis, Wiley Finance (1991)