A mixed lot in stock trading is a combination of a round order and an odd lot, allowing traders to place trades for an odd number of stocks. Different markets have different standard orders, and odd lot trading may indicate a panic from lower tier investors.
The term “mixed lot” is used in several senses in relation to finance, including in discussions of auction lots, mixed lots of real estate, and securities trading. This article focuses on its use in stock trading, where a mixed lot is a combination of a round order and an odd lot for stocks, allowing a trader to place a trade for an odd number of stocks. An order for a mixed lot is filled in the same way as for other types of securities trading.
In stock trading, for convenience, people work with numbers that are standard in trading, such as 100 units. When someone places an order for something like two lots, that means that person wants 200 units of the stock to be traded. An entire order of this nature is known as a round order. If someone wants to buy a different amount, like 75 units, that’s an odd lot.
Someone buying fewer than 100 stocks would place an order for an odd lot. Someone buying more than 100 would need a mixed lot including one or more round lots, plus the odd lot to make up the difference. For example, someone wanting to buy 250 shares of a stock would place a mixed lot: two round orders and an odd lot of 50 shares. Likewise, people selling stocks can enumerate them in the same way, making people aware of the number of shares available for purchase.
Mixed lots can be bought and sold freely on markets around the world. Different markets may have different standard orders and it is important to be aware of this when placing trades. A round order in one commodity trading market, for example, might be 1,000 units, as opposed to 100 units of a stock trading in another market. Investors usually do not readily forgive mistakes made by people unfamiliar with trading conventions and it is advisable to study before placing trades.
Large institutional investors tend to place their orders in round lots. An increase in odd lot trading may be indicative of a panic from lower tier investors. These investors usually cannot afford to trade in round lots and when they grow concerned about their portfolios, they place buy and sell orders for odd lots to change their position in the market. According to the “odd lot theory,” larger investors pay attention to such trades, as they can indicate a shift in the market from below.
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