Reading the evidence
Signal is repeatable information relevant to the question; noise is variation that obscures or imitates it under the chosen model. The separation is uncertain and context-dependent.
Make it click
A faint melody can exist beneath radio static, while the ear can also imagine patterns in static alone. Repetition and clearer recording help distinguish them.
Now put that into markets
Market prices contain information, reactions, liquidity needs and randomness. Filters can reduce noise or accidentally remove the signal.
Signal-to-noise improves with better measurement, stronger effects and more relevant independent data. Overfitting treats sample-specific noise as signal.
Define the target and compare out-of-sample prediction with simple baselines. Inspect stability and economic mechanism.
Noise is not synonymous with unwanted data, and a smooth series can be artificially stale. Post-processing can create confidence without information.
Takeaway
