Odd Lot Theory
What is 'Odd Lot Theory'
A technical analysis theory/indicator based on the assumption that the small individual investor is always wrong. Therefore, if odd lot sales are up - that is small investors are selling stock - it is probably a good time to buy.
Explaining 'Odd Lot Theory'
This approach assumes small investors have a low risk tolerance and tend not to hold a stock for the long-term.
Further Reading
Odd-lot transactions around the turn of the year and the January effect
www.jstor.org [PDF]
… Theoretical evidence regarding the tax motive for trading is reported in Dyl (1979) and Constantinides (1983) … and buying activity that cause the ratios of sales to purchases of odd lots to change … We assume that odd-lot trading is a good proxy for trading by individual investors …
www.jstor.org [PDF]
… Theoretical evidence regarding the tax motive for trading is reported in Dyl (1979) and Constantinides (1983) … and buying activity that cause the ratios of sales to purchases of odd lots to change … We assume that odd-lot trading is a good proxy for trading by individual investors …
papers.ssrn.com [PDF]
… Theoretical evidence regarding the tax motive for trading is reported in Dyl (1979) and Constantinides (1983) … and buying activity that cause the ratios of sales to purchases of odd lots to change … We assume that odd-lot trading is a good proxy for trading by individual investors …
www.jstor.org [PDF]
… Theoretical evidence regarding the tax motive for trading is reported in Dyl (1979) and Constantinides (1983) … and buying activity that cause the ratios of sales to purchases of odd lots to change … We assume that odd-lot trading is a good proxy for trading by individual investors …
www.jstor.org [PDF]
… Theoretical evidence regarding the tax motive for trading is reported in Dyl (1979) and Constantinides (1983) … and buying activity that cause the ratios of sales to purchases of odd lots to change … We assume that odd-lot trading is a good proxy for trading by individual investors …
www.jstor.org [PDF]
… Theoretical evidence regarding the tax motive for trading is reported in Dyl (1979) and Constantinides (1983) … and buying activity that cause the ratios of sales to purchases of odd lots to change … We assume that odd-lot trading is a good proxy for trading by individual investors …
elibrary.ru [PDF]
… Theoretical evidence regarding the tax motive for trading is reported in Dyl (1979) and Constantinides (1983) … and buying activity that cause the ratios of sales to purchases of odd lots to change … We assume that odd-lot trading is a good proxy for trading by individual investors …
www.tandfonline.com [PDF]
… Theoretical evidence regarding the tax motive for trading is reported in Dyl (1979) and Constantinides (1983) … and buying activity that cause the ratios of sales to purchases of odd lots to change … We assume that odd-lot trading is a good proxy for trading by individual investors …
www.sciencedirect.com [PDF]
… Theoretical evidence regarding the tax motive for trading is reported in Dyl (1979) and Constantinides (1983) … and buying activity that cause the ratios of sales to purchases of odd lots to change … We assume that odd-lot trading is a good proxy for trading by individual investors …
books.google.com [PDF]
… Theoretical evidence regarding the tax motive for trading is reported in Dyl (1979) and Constantinides (1983) … and buying activity that cause the ratios of sales to purchases of odd lots to change … We assume that odd-lot trading is a good proxy for trading by individual investors …
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Q&A About Odd Lot Theory
What is odd lot theory?
Odd lot theory is a technical analysis theory that assumes small investors are always wrong.
How does one use Odd Lot Theory?
One uses it by taking advantage of market inefficiencies that occur when there are large orders placed for a security or commodity.
Why would someone want to take advantage of market inefficiencies?
To make a profit from the price movement caused by these large orders being placed.
What is the purpose of Odd Lot Theory?
The purpose of Odd Lot Theory is to help investors make better decisions about their investments.
Why do odd lot sales tend to be an indicator of market direction?
Because it is assumed that small investors have a low risk tolerance and tend not to hold a stock for the long-term.
What do you need to know before using this theory?
You need to know how much money you have and what your investment goals are.
What does this approach assume about small investors?
It assumes they have a low risk tolerance and don't hold stocks for the long term.
Is this approach effective in determining market direction?
Yes, it can be effective in determining market direction.
Who created Odd Lot Theory?
Gordon Scott created Odd Lot Theory.