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Mixed Lot Orders

Moneyzine Editor
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Moneyzine Editor
2 mins
February 8th, 2024
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Mixed Lot Orders

Definition

The term mixed lot refers to an order that contains a combination of both round and odd lot orders. A mixed lot for stock is any order that is greater than 100 shares, but not a multiple of 100 shares.

Explanation

The standard trading unit for common stocks is 100 shares, while it's $100,000 for bonds. Trading in a multiple of a standard unit is referred to as a round lot, while trading fewer shares than a round lot is referred to as an odd lot. A mixed lot contains a combination of both odd and round lots. For example, an order for 1 to 99 shares of stock is an odd lot order. Trading 100 or 200 shares of stock is a round lot order. If the investor trades 125 shares of stock, the trade would be considered a mixed lot order.

Broker commissions for trades are typically stated in terms of a standard trading unit for a security. In the case of common stock, the fee charged by a broker to execute a trade would be stated as a minimum fixed amount for a standard trading unit. In the past, traders would try to avoid placing orders for odd or mixed lots, since the commission can have a significant impact on the trader's return on investment.

Mixed lots are treated differently by exchanges too, since the investor is not trading in a standard unit. For example, these orders will not affect the displayed bid / ask prices, and they are not posted to tickers. Finally, since the trade is not in a standard unit, the execution of the transaction is also delayed.

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Designated Order Turnaround (SuperDOT)
The term designated order turnaround system refers to a computerized network that routes instructions to exchange specialists, thereby bypassing brokers. The designated order turnaround system quickly executes orders to both buy and sell relatively large baskets of stock.
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Automated Order System (AOS)
The term automated order system refers to a computerized network that transmits instructions to the designated order turnaround system or to floor brokers working on the exchange. The automated order system routes the trader's instructions so they can be quickly executed.
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