Weak Form Efficiency
A version of the efficient markets theory on how markets work. It holds that the market efficiently deals with most information on a given security and reflects it in the price immediately. Specifically, weak form efficiency states that technical analysis is ineffective and that prices are on a random walk. Investors and academics disagree on how well the model works, but it is less controversial than the semi-strong form of the EMT and the strong form of the EMT.
A component in the theory of efficient markets that holds that successive changes in security prices are independent of one another. If security markets are efficient to the extent of the weak form, existing prices reflect all the information contained in historical market data. Therefore, the charting of security prices and volume is not useful in projecting future price movements. The weak form of efficient markets supports the random-walk hypothesis. Compare strong form.