Information versus noise
When a market moves during the week, how can you tell whether that movement changes what is actually known?
In plain words
Information is a price move that shifts the level around which a market is trading and is likely to persist; noise is movement that carries no lasting shift, leaving the price near where it started. Distinguishing them usually means comparing a week's net change with its round-trip swings and with its own history.
Why it matters
Traders who treat noise as information build positions around moves that reverse, paying spread, funding and funding-like costs for nothing. Net change measured against range and against past weeks shows how much of a week's activity actually stuck.
In a real week: BTC, week of 20 November 2023
In the week of 20 November 2023, BTC closed 0.23% above its open after a 7.81% range. Its best day, 22 November, gained 4.66%, and its worst day, 21 November, lost 4.56%. The week's return ranked at the 47th percentile of 301 weeks of history, volume was 1.2 times its prior 12-week average, and the close sat in the middle third of the range. Big daily swings ended in a near-flat week, two percent below the 52-week high, after four consecutive up weeks.
A common mistake
Treating any large daily swing as new information. A market that falls one day and recovers the next has revealed volatility, not a change in level.