Odd Lot Theory

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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.

INVESTOPEDIA EXPLAINS '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. Lot

    In general, any group of goods or services making up a transaction. ...
  2. Odd Lot

    An order amount for a security that is less than the normal unit ...
  3. Mixed Lot

    A type of order for a number of securities that is not a round ...
  4. Appraised Equity Capital

    The excess of the market value of an asset over its book value. ...
  5. Asset Valuation Review (AVR)

    A process that establishes an estimate of the value of a failed ...
  6. Derived Investment Value (DIV)

    A valuation methodology used to calculate the present value of ...
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