Investor Glossary-odd lot theoryInvestor Glossary-odd lot theoryInvestor Glossary-odd lot theoryInvestor Glossary-odd lot theoryInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Odd Lot Theory

The HTML to link to this page
 

Odd lot theory is a theory within the discipline of technical analysis. Unlike large institutional investors, small investors tend to trade in smaller, "odd lots." Odd lot theory derives its name from these odd lot investors who buy less than 100 shares.

Odd lot theory states that small independent investors are generally wrong about the timing of equity trades, and thereby serve as a contrary indicator of future stock price movements. Odd lot theory predicts that when the volume of odd lot purchases spike, the market is due for a downturn. On the other hand, odd lot theory states that under bear market conditions, following a mass sell-off of odd lots, the market is about to recover.

While historically popular, odd lot theory has failed to be borne out by analysis of market data and has fallen out of use by most investors. Another reason for the decline of odd lot theory is the propensity for small investors to invest in mutual funds rather than shares of stock.



Rate this Odd Lot Theory definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: in escrow, irrevocable trust, FICO score, labor relations, required rate of return, current ratio, debt service coverage, margin rate, risk management, retained earnings, covered put, 1035 exchange, average price per share, phantom income, 144a, Key Rate Duration, implied volatility, quality assurance, cancelled check, reverse mortgage, stock market close, limit order, inflation, liquidity ratio, diluted share, command economy, option premium, EBITDA, ex-dividend, minority interest, FTSE, annual return, 401a, LIBOR, balance sheet, wholly-owned subsidiary, per diem, ex-dividend date, Zero Cost Collar, deferred revenue, stock split, 1031 exchange, VIX, real GDP, deferred tax, class C shares, open position, dividends payable, APR


Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use