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.

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    Discover what technical indicators are, when they are useful and how their specific design limits their meaningfulness to ... Read Answer >>
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    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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    Understand the difference between fundamental, technical and quantitative analysis, and how each measurement helps investors ... Read Answer >>
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