What It Is:
How It Works/Example:
Lots are the standard trading amount, and thus they usually incur the most favorable commission costs. For example, if you wanted to buy six lots of Company XYZ stock, you would be buying 600 .
Investors, especially individuals, frequently cannot or do not want to the expense of trading in round lots, however, which is why most brokers also accept “odd-lot” trades (though they may charge a higher commission for doing so). However, the advent of electronic and online trading platforms has reduced, and in some cases eliminated, these odd-lot premiums.
Why It Matters:
Lot investors tend to be larger investors. The ratio of odd-lot buying to odd-lot selling, on the other hand, is often used to evaluate small-investor sentiment.