Odd Lot Theory

DEFINITION of '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.

BREAKING DOWN 'Odd Lot Theory'

This approach assumes small investors have a low risk tolerance and tend not to hold a stock for the long-term.

RELATED TERMS
  1. Odd Lot

    An order amount for a security that is less than the normal unit ...
  2. Odd Lotter

    An individual investor who buys securities, usually stocks, in ...
  3. Retail Investor

    Individual investors who buy and sell securities for their personal ...
  4. Mixed Lot

    A type of order for a number of securities that is not a round ...
  5. Round Lot

    A group of 100 shares of a stock, or any group of shares that ...
  6. Even Lot

    A normal unit of trading for securities or bonds. An even lot ...
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RELATED FAQS
  1. How much more will it cost me to buy an odd lot of shares?

    A round lot is a predetermined number of shares of stock - usually 100 shares, while an odd lot refers to any number of shares ... Read Answer >>
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    Learn about the best ways to invest in small cap companies. Find out when small cap companies yield the highest return and ... Read Answer >>
  3. What's the smallest number of shares I can buy?

    Unlike mutual funds, which can be purchased in fractional units, shares of stock cannot be divided. So, the smallest number ... Read Answer >>
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