1. ODD LOT BALANCING

2. The odd lot balancing index (“OLBI”) is a market sentiment indicator that shows the ratio of odd lot sales to purchases. An odd lot is a stock transaction of less than 100 shares. It is assumed that,odd lotters, the markets smallest traders, don’t know what they are doing.

3. INTERPRETATION When the Odd Lot Balance index is high, odd lotters are selling more than they are buying and are therefore bearish on the market. To trade contrarily to the odd lotters, you should buy when they are selling and sell when they are buying. You can have smooth day-to-day fluctuations of the Odd Lot Balance index by plotting a 10-day moving average of the index.

4. ODD LOT BALANCE Some brokerages charge higher commissions for odd lot transactions, (often 1/8 of a point per share, called the odd lot differential). A round lot is the normal trading unit. The round lot comes in multiples of 100 shares. Round lots are sometimes referred to as a normal trading unit.

5. ODD LOT BALANCE Calculation odd lot sales odd lot purchases

6. ODD LOT THEORY An investment strategy that assumes small investors are always wrong because they react emotionally to the market and are usually guilty of bad timing.

7. ODD LOT THEORY In a rising market, a lot of odd lot buying is considered an indication of a technical weakness in the market and a signal to sell. In a declining market, a lot of odd lot selling is seen as an indication of technical strength and a signal to buy.

8. ODD LOT THEORY Studies of odd lot trading, however, have proven that this theory doesn’t have much substance and that investors trading odd lots of market leader stocks Round Lot. This is true because in some of the inactive stocks a unit of trading is 10 shares instead of 100.