Odd Lotter
Categories: Trading
It sounds like a very British insult. As in, "I was driving in my lorrie and some sozzled odd-lotter crashed into my boot."
But, in fact, it's a Wall Street term. It refers to traders who operate in small quantities or in bunches of shares that don't come in round numbers.
The term "lot" in stock trading generally applies to a chunk of 100 shares. Most traders who work in any quantity stick to full-sized lots...100, 200, 500 shares, etc.
An odd lotter might buy 43 shares, or 127 shares...an odd lot. Usually, it's because they're relatively small-time and are purchasing the most shares they can afford for that particular situation. Or an odd lotter could be targeting a dollar amount rather than a share total. "Buy me $25,000 of Exxon Mobil," for instance, rather than, "Buy me 100 shares of Exxon Mobil."
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Finance: What is Odd Lot Theory?37 Views
finance a la shmoop what is odd lot theory
well odd lot theory is an investment notion that presupposes that retail [Woman investor appears giving thumbs up]
investors are idiots the theory here is that when you see a lot of trades with
odd Lots you should basically do the opposite of what those trades are doing
like you know buying up a stock or selling down a stock or something like [Man throws stock away]
that well odd Lots are basically just small
order amounts like 22 shares here in 58 shares there in 77 shares here there and
everywhere and the idea is that odd Lots are almost always traded by small retail
investors who can't afford large blocks of stock and aren't wealthy so the [Stack of cash blows away]
presumption is that they're not experienced in stock market or have the
education or training to actually be making real trade schooled professional [Fire extinguisher blows out fire]
institutional investors who generally know what they're doing generally manage
large pools of money and trade in very large blocks like think big fat round [Stocks land around pool of money]
numbers in the millions of shares so when you inspect a tape running by
showing tons of tiny trades while odds are good that those are placed by you
know cardiologists and schoolteachers gardeners and plumbers all believing
that they can invest better than the market and the guys who make twenty five [People working in an office]
million dollars a year at goldman sachs yeah good luck with that and
statistically most retail investors who think they're smart enough to beat the
market are in fact idiots so the ethos of zagging in the opposite
direction of wherever retail investors are zigging well historically that's [Retail investor zig zagging]
generally been a really good idea they might be excellent cardiologists or
teachers or gardeners but when it comes to investing there well you know small
potatoes [Woman holding potato plant]