Question

The odd-lot trading theory advocates that small investorsA) tend to buy high and sell low.B) react in a manner which generally forecasts the future direction of the market.C) are the first to react to market changes.D) tend to be the first to speculate on a bull market

Answer 1

Answer:

The correct answer is A) tend to buy high and sell low.

Explanation:

The theory of odd lots is a theory of technical analysis based on the assumption that the small individual investor who trades foreign lots is often wrong. Therefore, if sales of odd lots increase and small investors are selling a share, it is probably a good time to buy. Vice versa, when purchases of odd lots increase, the theory of odd lots would indicate a good time to sell.