What is an Odd Lot?

An odd lot is an order for anything less than 100 shares. This is the opposite of a 'round lot,' which are orders in multiples of 100 shares.

How Does an Odd Lot Work?

Investors, particularly individuals, are frequently unable or unwilling to bear the expense of trading shares in even round lots. Nearly all brokers accept odd-lot trades, but some 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 Does an Odd Lot Matter?

Odd-lot orders tend to be placed by small personal investors rather than institutional traders. Thus, the ratio of odd-lot buying to odd-lot selling is often used to evaluate small-investor sentiment. Trends in odd-lot short sales may also be indicative of negative sentiment by small investors.

The controversial odd-lot theory states that odd-lot traders are poor market timers and that profits can therefore be made by trading contrary to odd-lot trading patterns.