When investing in a common stock an odd lot is any number of shares less than 100. A person who purchases an odd lot of shares is typically viewed as a small less experienced investor.
The Odd Lot Theory is a contrarian indicator that states when the small less experienced investor is buying it indicates a market top and is a signal for the more experienced investor to sell. Conversely when the small less experienced investor is selling it indicates a market bottom and a good time for the more experienced investor to buy.
The bottom line is being a disciplined investor that does not follow the crowd can be very profitable. Do not let emotion guide an investment decision.
Showing posts with label odd lot theory. Show all posts
Showing posts with label odd lot theory. Show all posts
Wednesday, November 28, 2007
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