What can happen to market if there are no noise traders?
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penrod
Apprentice
Joined: 14 Aug 2005
Posts: 1
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 Posted: 08/30/08 - 07:20 Post subject: |
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| Hello to you all. Couple of days ago, I heard about a term noise traders. Now, I know that there are all sorts of terms regarding market and stuff, but this seemed pretty funny. Can you tell me what noise traders are and why are they important? What can happen to market if there are no noise traders? Thank you. |
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charlton
Apprentice
Joined: 26 Mar 2008
Posts: 1
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| Posted: 09/14/08 - 02:42 Post subject: |
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| Hello to you too. Well, I guess that some terms are really funny. Here is the thing. Noise trader is connected to the concept of a perfect market. It is a trader who does not possess all information about the market. In fact, if there were no noise traders on the market, it would crash because all the participants would have the information, prices would be obvious and there will be no profit. Well, that would be it. I hope that I managed to explain this to you. Bye! |
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adams
Apprentice
Joined: 21 Jan 2005
Posts: 3
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| Posted: 09/28/08 - 22:04 Post subject: |
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| Hello to you both. I just wanted to add that I don’t think there is a market without noise investors. Simply, those markets would not have purpose for their existence. It is mostly a theoretical model which is connected to behavior finance. I read something about whether they really exist. Because, I guess that you do need to have some kind of information when going to the market. That was what I wanted to say. Good bye! |
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