An approach of spectrum analysis to the stock prediction

James L. Luo

No cmxha, OSF Preprints from Center for Open Science

Abstract: This article constructs a brand new approach to the prediction of capital markets in the perspective of Volume Spectrum Analysis (VSA). Unlike all traditional financial theories, the model of VSA features volume rather than price and focuses on its inner structure, i.e. the distribution of lot sizes that reveals asymmetric information in trading, which rejects the assumption of perfect information in Efficient Market Hypothesis (EMH) and makes the validity test possible. The flaw of modern finance, that is, taking the normality of price changes for granted, and those of other solutions such as game theory, are investigated to show why it is only VSA that may capture the essence of human action in capital markets.

Date: 2020-03-09
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Persistent link: https://EconPapers.repec.org/RePEc:osf:osfxxx:cmxha

DOI: 10.31219/osf.io/cmxha

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