What Is A Dark Pool In The Stock Market

In a dark pool trading system investors place buy and sell orderswithout disclosing either the price of their trade or the number of shares. Dark pools are an ominous sounding term for private exchanges or markets for securities trading.

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Dark pools or black pools are privately organized and managed financial exchanges for trading securities.

What is a dark pool in the stock market. These ad hoc liquidity pools protect the market by preventing speculative crazes. Dark Pools are private stock exchanges where the big boys on Wall Street place their trades. The dark pools usually arent available to the general.

Dark pools are parallel and largely opaque institutional trading markets where large transactions in equities bonds and foreign currencies occur daily. Dark Pools are electronic Alternative Trading Systems very similar to stock exchanges where trades can be matched. Stock markets operate on the assumption that all available information about a stock is priced in.

The bulk of dark pool trades represent large trades by financial institutions that are offered away from public exchanges like the New York Stock Exchange and the NASDAQ. Its basically the Wild West of the stock market Heres the big difference. Dark pools otherwise known as Alternative Trading Systems ATS are legal private securities marketplaces.

In finance a dark pool also black pool is a private forum alternative trading system or ATS for trading securities derivatives and other financial instruments. In a traditional stock exchange when you send an order to the market with a price limit that order shows up on the exchanges trading book. In juxtaposition to the USAs free market narrative.

Off-exchange trading also known as over-the-counter OTC or Dark Pool trading is done directly between two parties without the supervision of an exchange. They are invisible to the public and other participants in the dark pool. Dark pools are also sometimes called dark pools of liquidity.

At the moment it is estimated that about 40 of all institutional trading happens on these shadow exchanges. The big difference of course is. Dark pool print orders can only be found on private exchanges and are only accessible to institutions that cannot be accessed by the general public.

However unlike stock exchanges dark pools are not accessible by the investing public. Thats why we trust them to determine the value of public companies. Therefore are basically unknown to retail and general investors.

Dark pools were created specifically to allow big institutional investors to swap large blocks of shares privately and retail investors who leverage this data can gain an unfair advantage in the stock market. Exchanges facilitate liquidity provide transparency and maintain the current market price. Dark pools are dark not transparent Trading in dark pools is all about visibility and like the name implies dark pools dont have a lot of visibility.

These dark pools arent accessible to the general public. This important information will shed light on the securities that are traded in each dark pool which occurs away from traditional stock exchanges. Theyve existed for decades.

But as the name implies there is a dark side to dark pools. A dark pool is a private exchange used for trading securities in a non-public manner. To simplify things you can think of Dark Pools as a separate exchange where you can buy or sell Stock Shares without effecting the price.

Liquidity on these markets is called dark pool liquidity.

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