The effective market hypothesis (EMH) is the hypothesis that explains all market trends and movements in current stock prices. This was a hypothesis formulated in the 1970s by Eugene Francis Fama. In summary, the value of shares and other assets reflects their true intrinsic value and, therefore, the financial efficiency of the market. As a result, there is fair competition between all traders and investors, and every trader and investor has access to current prices, which indicates, in some ways, the market climate. Briefly, if the purchase relates to any informational message, this information will affect the exchange rate.

The Efficient Market Hypothesis (EMH) is a theory in financial economics that posits that financial markets efficiently incorporate all available information into asset prices. According to this hypothesis, it is impossible to consistently achieve higher-than-average returns through trading or investment strategies, as any new information is quickly and accurately reflected in asset prices. The EMH comes in three forms: weak, semi-strong, and strong, each representing different levels of information efficiency.

In the weak form, past prices and volumes are considered already reflected in current prices. In the semi-strong form, all publicly available information is assumed to be factored into prices. The strong form extends this to include all information, public and private. While the EMH has been widely debated and criticized, it remains a fundamental concept in financial theory, influencing investment strategies and shaping discussions on market efficiency and information processing in financial markets.