The most successful investors tend to let reason, not emotion, guide their decisions. However, smaller investors have acquired a reputation for doing just the opposite – seeking out companies toward which they feel a personal connection and relying on intuition more than cold, hard logic.
A technical Analysis theory/ indicator based 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.
This Odd-Lot approach assumes small investors have a low risk tolerance and tend not to hold a stock for the long term. An Odd-lot is an order amount for a security that is less than the normal unit of trading for that particular asset. Trading Commissions for Odd-lots are generally higher on a percentage basis than those for standard lots, since most brokerage firms have a fixed minimum commission level for undertaking such transactions.
Odd-Lots can include any number of shares between one and 100, a round lot is any lot of shares that can be evenly divided by 100.For example, 75 shares would be an odd lot since it is below 100 shares, while 300 shares would be a round lot since it can be evenly divided by 100. A mixed lot consists of both a round lot and an odd lot. An order of 198 shares would be considered a mixed lot.
Odd lots or mixed lot trades typically incur higher trading costs, but improved electronic trading technologies have helped to reduce the added fees for odd lot trades.