Trading

Important Things To Know About Dark Pool Trades

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In the past decade, dark pools have become an important part of the equity markets worldwide. They have emerged to be tough competitors and as well as alternatives to traditional stock exchanges.

Many investors are not quite sure about dark pool trades. This is mainly because of the rumours surrounding it. Due to a lack of knowledge, dark pool trades are not perceived well by many investors. This is why we are taking this opportunity to clear a few things about it. This will help you understand the concept of the dark pool better.

Things You Should Know About Dark Pool Trades

Here are some of the important things you need to know about dark pools.

1. It is for everyone

Originally dark pools were meant for only big investors who could buy and sell huge orders of stocks without making a big impact on the market. But these things have changed now. It has been made just like stock exchanges now. It requires people to trade and buys and sell orders. In other words, it is meant for everyone and not just big institutional investors.

2. Darks pools are not transparent

Dark pools don’t have a lot of visibility. For instance, when you send an order in a stock exchange, the order is shown in the trading book which can be seen by the public. However, this kind of transparency is not available in dark pools. It doesn’t show you the price or how much of a stock you want to invest in. This is why dark pools are known as dark.

3. It needs traditional stock markets

The dark pool needs traditional stock markets because it helps them to determine the price of a particular stock. As you already know that the price of a stock is not shown in dark pools, they need displayed markets to see the price benchmark.

Dark pool trade is not at all easy. Unless you have complete knowledge about it, you should not get into it. It is because of this reason that most investors prefer the traditional stock markets.

Le Rues Chaitner & Co Canada’s 9th Leading Private Investments For Private Assets, Investment Portfolio Solutions for future investments-2020

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