Signal and noise
How can you tell whether a price move carries real information or is just ordinary randomness?
In plain words
Signal is the part of a price move that reflects something new and persistent about the market; noise is the wobble that happens daily with no lasting meaning. Distinguishing them means comparing a move against the market's usual variation.
Why it matters
Reacting to noise produces unnecessary trading costs and whipsawed positions; missing signal leaves a trader unprepared for a genuine change. The comparison is always relative: the same percentage move can be unremarkable in one regime and extreme in another.
In a real week: BTC, week of 17 August 2026
In the week of 17 August 2026, BTC returned 23.58% with realised volatility of 58.7% a year, ranking in the 99th percentile of 444 weeks of history. The prior four weeks moved only +1.05%, -2.8%, +2.09% and -3.08%. The size and rarity of the move make it a candidate for signal rather than noise, though rarity alone does not confirm persistence.
A common mistake
Assuming a large move is automatically meaningful, or a small move is automatically noise. Rarity and context, not size alone, separate the two.