originally a dealer who bought round lots of stock and resold it in odd lots to retail brokers who, in turn, accommodated their smaller customers at the regular commission rate plus an extra charge, called the odd-lot differential. The assembling of round lots from odd lots is now a service provided free by New York Stock Exchange specialists to member brokers, and odd-lot transactions can be executed through most brokers serving the retail public. Brokers handling dd lots do, however, receive extra compensation; it varies with the broker, but 0.125 per share in addition to a regular commission is typical.

historical theory that the odd lot investor-the small personal investor who trades in less than 100-share quantities-is usually guilty of bad timing and that profits can be made by acting contrary to odd-lot trading patterns. Heavy odd-lot buying in a rising market is interpreted by proponents of this theory as a sign of technical weakness and the signal of a market reversal. Conversely, an increase of oddlot selling in a declining market is seen as a sign of technical strength and a signal to buy. In fact, analyses of odd-lot trading over the years fail to bear out the theory with any real degree of consistency, and it has fallen into disfavor in recent years. It is also a fact that odd-lot customers generally, who tend to buy market leaders, have fared rather well in the upward market that has prevailed over the last fifty years or so.

ratio obtained by dividing odd lot short sales by total odd-lot sales, using New York Stock Exchange (NYSE) statistics; also called the odd-lot selling indicator. Historically, odd-lot investors-those who buy and sell in less than 100-share round lots-react to market highs and lows; when the market reaches a low point, odd-lot short sales reach a high point, and vice versa. The oddlot ratio has followed the opposite pattern of the NYSEmember short sale ratio.