Blind Bid

Filed Under » ,
Dictionary Says

Definition of 'Blind Bid'

An offer to purchase a bundle of securities without knowing the exact securities being purchased. A blind bid is risky in that the investor is unaware of the composition of the investments being bid on. The risk is that the investor will end up owning worthless securities.
Investopedia Says

Investopedia explains 'Blind Bid'

Blind bids are more likely to be used by institutional investors who do not want to influence the overall market by making targeted buy and sell trades, as a blind bid allows them to trade a book of securities. In a blind bid, the investor typically knows whether the counterparty is buying or selling, and is also aware of the number of stocks in the portfolio and their notional values

Institutional investors look at the purchase of securities differently than individual investors, as individual investors use liquidity, volatility and company news to determine what price they want to pay. Instead of trades that could reach into the thousands of dollars and involve a few securities, institutional investors make trades in the hundreds of millions that involve entire books of securities. The larger the blind bid transaction, the greater the risk premium associated with the underlying securities.

Articles Of Interest

  1.

    Institutional Investors And Fundamentals: What's The Link?

    Big-money sponsorship might make a company look good, but it's not always a reliable gauge of stock quality.

  2. The Roles Of Traders And Investors In The Marketplace

    Discover how these two groups work together to keep the market functioning properly.

  3. Keeping An Eye On The Activities Of Insiders And Institutions

    These transactions reveal much about a stock. We go over what to consider and where to find it.

  4. The Pros And Cons Of Institutional Ownership

    These big players can both create and destroy value for shareholders.

  5. The Market Participant Playbook

    Find out what effect institutional investors have on the stock market and individual traders.

  6. Quit Your Job To Trade Stocks?

    Ready to quit your day job and become a full-time trader? These tips will help you determine your area of expertise.

  7. A Day In The Life Of A System Trader

    Systems traders divide their time between trading, developing, backtesting, optimizing and forward testing, to create viable and high-probability trading systems.

  8. Beginner Trading Fundamentals

  9. Arbitrage Squeezes Profit From Market Inefficiency

    This influential strategy capitalizes on the relationship between price and liquidity.

  10. A Day In The Life Of A Day Trader

    Day trading has many advantages and, while we often hear about these perks, it's important to realize that day trading is hard work.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Racketeering

    Racketeering refers to criminal activity that is performed to benefit an organization such as a crime syndicate. Examples of racketeering activity include...

  2. Lawful Money

    Any form of currency issued by the United States Treasury and not the Federal Reserve System, including gold and silver coins, Treasury notes, and Treasury bonds. Lawful money stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves.

  3. Fast Market Rule

    A rule in the United Kingdom that permits market makers to trade outside quoted ranges, when an exchange determines that market movements are so sharp that quotes cannot be kept current.

  4. Absorption Rate

    The rate at which available homes are sold in a specific real estate market during a given time period.

  5. Yellow Sheets

    A United States bulletin that provides updated bid and ask prices as well as other information on over-the-counter (OTC) corporate bonds...

  6. Bailment

    The contractual transfer of possession of assets or property for a specific objective.
Trading Center