Odd – Lot Theory

Odd Lot Theory – This theory is basically a technical analysis that forms the basis on an assumption which states that stock market trend forecasting can be done by observing the odd lot transactions happening.

It assumes that odd lot traders are mostly small investors who are unaware of stock market trends and tendencies. Hence, if the odd lotters or odd lot traders are selling heavily, it is a good time to buy those shares and if they are buying heavily, it will be a good time to buy. This odd lot theory approach assumes that the odd lotters do not hold up on stocks for a long period of time.

Ads by Google

This theory gives insights and observations about the buying/selling pattern of individual investors. Hence, the theory suggests that share profits can be made by trading in shares opposite to the pattern used by odd lotters. However, owing to lack of supporting data, this theory has been proved to be unpopular and no longer useful.

Edited and Updated 08th March 2014

You can leave a response, or trackback from your own site.

Leave a Reply

You must be logged in to post a comment.

Powered by WordPress