Semi-strong efficient market means that the fundamental information in the market is fully reflected in the securities price, but technical analysis and insider information may bring excess returns. Fundamental information includes the company's financial status, operating ability, industry prospects, etc. Technical analysis is a method to predict the future price trend based on data such as securities price and trading volume. Insider information refers to the undisclosed information held by employees within the company. For semi-strong efficient market, investors can use technical analysis to obtain excess returns, but insider trading is still illegal.
The method of obtaining excess returns by technical analysis is often used in the trading of stocks, commodity futures and cryptocurrencies. The basic idea of technical analysis is that data such as price trend and volume can predict future price changes. For example, in the stock market, investors can use technical analysis indicators such as moving average and MACD to study the trend of stock prices, so as to predict the future price trend.
However, the method of technical analysis has its limitations. First of all, technical analysis only predicts the future price trend through data, and cannot provide the root cause of price change. Secondly, it is difficult for the data based on technical analysis to accurately reflect the complex market changes, especially in the face of new market conditions, because it is impossible to predict the future changes of market characteristics and external market shocks, and it is very risky to use technical analysis to predict price changes.
In addition, insider trading is also the difficulty of semi-strong efficient market. Although insider trading is illegal, in actual scenes, internal employees often hold some undisclosed information of the company, which may be crucial for external investors. Therefore, internal employees can use this information to buy and sell stocks and earn excess returns before the public information is released.
Generally speaking, semi-strong efficient market is a relatively complex market situation. Although the fundamental information has been fully reflected, technical analysis and insider trading may bring excess returns, but there are also certain risks and legal risks. For investors, it is necessary to comprehensively consider fundamental information, technical analysis and risk management and formulate appropriate investment strategies.