Blind Bid

AAA

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 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.

RELATED TERMS
  1. Retail Investor

    Individual investors who buy and sell securities for their personal ...
  2. Institutional Shares

    A class of mutual fund shares available for sale to investing ...
  3. Institutional Investor

    A non-bank person or organization that trades securities in large ...
  4. Block Trade

    An order or trade submitted for sale or purchase of a large quantity ...
  5. Bid-Ask Spread

    The amount by which the ask price exceeds the bid. This is essentially ...
  6. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
RELATED FAQS
  1. How is buying on margin regulated by the Securities and Exchange Commission (SEC)?

    The Federal Reserve Board and the Financial Industry Regulatory Authority (FINRA) regulate buying on margin to a greater ... Read Full Answer >>
  2. Why is the Vortex Indicator (VI) important for traders and analysts?

    Doug Siepman and Etienne Botes developed the vortex indicator to anticipate reversals in price trends. They believed that ... Read Full Answer >>
  3. What is a common strategy traders implement when using the Trade Volume Index (TVI)?

    The trade volume index (TVI) indicates whether an asset is being accumulated or sold. It is calculated using intraday tick ... Read Full Answer >>
  4. What is a common strategy traders implement when using the Volume Weighted Average ...

    Using the volume-weighted average price (VWAP) when trading in short-term time frames is highly effective and simple. One ... Read Full Answer >>
  5. Why is the Volume Weighted Average Price (VWAP) important for traders and analysts?

    Volume-weighted average price (VWAP) is an important tool that traders use to gauge whether a stock was bought or sold at ... Read Full Answer >>
  6. After Enron, are SPVs / SPEs considered good business practice?

    A special purpose vehicle (SPV), also known as a special purpose entity (SPE), is a separate entity created by a company ... Read Full Answer >>
Related Articles
  1. Investing Basics

    The Market Participant Playbook

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

    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.
  3. Investing Basics

    The Roles Of Traders And Investors In The Marketplace

    Discover how these two groups work together to keep the market functioning properly.
  4. Options & Futures

    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.
  5. Mutual Funds & ETFs

    The Pros And Cons Of Institutional Ownership

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

    Market Simulators: How To Outperform Warren Buffett

    That moment when you realize you just booked $108 million dollars in less than an hour: it puts butterflies in your stomach.
  7. Trading Strategies

    How To Best Analyze Relative Strength

    Relative strength indicators measure performance between similar instruments, uncovering opportunities that can translate into reliable profits.
  8. Active Trading Fundamentals

    Where And How Should You Make Your First Trade?

    New traders should enter markets that offer the greatest opportunity for learning their craft while keeping risk at a minimum.
  9. Trading Strategies

    High-Frequency Trading Regulations

    Current regulations on high-frequency trading, and possible future ones. How some people think high-frequency trading should be regulated or illegal.
  10. Trading Strategies

    The World's 10 Most Famous Traders Of All Time

    A review of the most famous and infamous traders in history.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center