Bunching

DEFINITION of 'Bunching'

The combining of odd-lot or round-lot orders for the same security so that they can be executed at the same time. Bunching occurs when traders and brokers combine small or unusually-sized trade orders into one larger order. If an order is bunched, all affected clients must agree to the bunching before the order is submitted.

BREAKING DOWN 'Bunching'

Bunching can be financially advantageous for investors with orders for less than 100 shares of a particular security, who would otherwise be charged extra fees for the odd-lot order, sometimes called an odd-lot differential. Odd-lot orders are difficult to match, and additional fees are common. Often, bunching occurs on the floor of an exchange when multiple round-lot orders or odd-lot orders are combined into one trade execution.

The term bunching also refers to a pattern that appears on a ticker tape when a series of same-security trades print one after the other.

RELATED TERMS
  1. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  2. Round Lot

    A group of 100 shares of a stock, or any group of shares that ...
  3. Market Order

    An order that an investor makes through a broker or brokerage ...
  4. Executing Broker

    The broker or dealer that finalizes and processes an order on ...
  5. Matching Orders

    The process for executing securities trades by pairing buy orders ...
  6. Bracketed Sell Order

    A sell order on a short sale that is accompanied (or "bracketed") ...
Related Articles
  1. Brokers

    Explaining Market Orders

    A market order is the most common order used to purchase a financial security.
  2. Online Stock Traders

    Online stock traders place buy/sell orders for financial securities and/or currencies with the use of a brokerage's Internet-based proprietary trading platforms. The use of online trading ...
  3. Investing

    How To Start Trading: Order Types

    The types of orders you use can have a large effect on your trading performance, so understanding the different order types is important to your success.
  4. Active Trading Fundamentals

    The Basics Of Trading A Stock

    Taking control of your portfolio means knowing what orders to use when buying or selling stocks.
  5. Active Trading Fundamentals

    Which Order To Use? Stop-Loss Or Stop-Limit Orders

    Stop-loss and stop-limit orders can provide different types of protection for investors seeking to lock in profits or limit losses. Investors need to know how each type of order works to know ...
  6. Options & Futures

    Brokers and Online Trading: Accounts And Orders

    Types of Accounts Depending on what type of securities you hold, there are four major choices you have when opening an account: Cash Account: The basic account where you deposit cash to buy ...
  7. Professionals

    Is The Series 24 Exam Hard?

    What makes the series 24 so challenging? The exam focuses very heavily on the supervision of trading and market making and the supervision of investment banking.
  8. Investing Basics

    Understanding Immediate-or-Cancel Orders

    A trader places an immediate-or-cancel order to immediately execute a trade in full or in part. Any part of the order that remains unfulfilled is canceled.
  9. Trading Systems & Software

    Guide to TD Ameritrade's Thinkorswim - Trade Management

    The tools within thinkorswim are for conducting analysis and ultimately making trades. There are many ways to make and manage trades within the platform. This section will go over some of the ...
  10. Trading Strategies

    Making The Trade: Understand Order Types

    Buying and selling stock can be a lot like buying or selling a car. Traders should use and understand tools such as market orders, limit orders, day orders, and good-'til-canceled orders to ensure ...
RELATED FAQS
  1. What is an odd-lot buyback?

    An odd-lot buyback occurs when a company offers to purchase shares of its stock back from people who hold less than 100 shares. ... Read Answer >>
  2. What's the difference between a market order and a limit order?

    Buy and sell trades with market orders at the present stock price and execute limit orders if the stock price falls within ... Read Answer >>
  3. Why do limit orders cost more than market orders?

    Learn the difference between a market order and a limit order, and why a trader placing a limit order pays higher fees than ... Read Answer >>
  4. How do I place a limit order online?

    Learn how a limit order is placed, the types of stocks it is most useful for and the specifications placed with it to suit ... Read Answer >>
  5. How do I place an order to buy or sell shares?

    Read a brief overview of how to open a brokerage account, how to buy and sell stock, and the different kinds of trade orders ... Read Answer >>
  6. What's the difference between a stop and a limit order?

    Different types of orders allow you to be more specific about how you'd like your broker to fulfill your trades. When you ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center