What Is a Dark Pool, and How Does It Impact Trading?

Dark pools refer to a unique kind of alternative trading system or exchange that is not accessible to the public. This exchange’s unique name references its lack of transparency.

So what is a dark pool in trading? Well, it’s a unique trading system that grants investors a chance to place huge orders without exposure. The trades are revealed after they have been reported and executed.

Understanding the Inner Workings of Dark Pools

These exchanges emerged around the 1980s when SEC gave brokers permission to perform block trades. What is a dark pool in trading? Well, the origin of most dark pools can be traced to 2005.

The 2005 SEC ruling was designed to cut transaction costs while increasing competition played a significant role in the increase of dark pools.

Therefore, dark pools charge lower fees since they’re housed by a considerable firm. The main benefit of dark pools is investors make huge trades without exposure. This helps prevent price devaluations which can otherwise occur when the general public gain access.

Dark pools are ideal for institutional investors making block trades. This means buying or selling large securities between 2 parties. These trades are so big and can have a tangible impact on the asset’s price.

How Do Dark Pools Affect the Stock Market?

Dark pools can have a considerable effect on the stock market. So what is the dark pool in stock market, and how do dark pools work? Well, dark pools are ideal for handling block trades that can affect the market.

Remember, huge trades can have a significant effect on the stock price and the market’s volatility.

Therefore, dark pools help lower the volatility of the market by concealing block trades. A block trade can reduce the value of the stock by increasing its supply in an open stock market.

Exploring the Meaning Behind Dark Pool Prints

The dark pool print is orders that are only accessible to lots of organizations that the public can’t access. Basically, they are common in private exchanges and traders can use them in dark pool exchanges.

Now that we know the dark pool print meaning, we need to understand that over 40% of institutional trading is dark pool trades. Institutions use these prints to sell over a million shares without affecting the public market.

Since we don’t know the clear intent of where they are selling or buying options, you need the right dark pool shorting strategy. The best method for gauging the market’s sentiment is combining it with the options orders flow data.

Tracking Dark Pool Trades for Strategic Insights

Do you know how to track dark pool trades? There are a number of indicators that can help you track the dark pool trades. They provide valuable insight that can help you create a dark pool strategy. The best tool is the scanner, which can help you track the volume levels and trade prices for specific stocks.

It will help you keep track of all the available block trades.

Remember, traders can’t ascertain the intention of the dark pool; therefore, they depend on trade price and volume traded. But the right indicator and prints can grant you great insights into the options and stocks.

The scanner lets you track the dark pool shares traded every day and all the available options.

Finding the Best Dark Pool Scanner for Trading

With the several options provided by the many dark pools picking the right one can be pretty challenging. By default, a dark pool platform shows you all the available shares. So you’ll need a scanner to show you the dark pool prints and block trades with over 100,000 shares.

Sure, there are smaller trades of less than 100,000 shares in dark pools, but we can’t view them. And that’s because they’re too small to be block trades. Therefore, the suitable scanner should be able to sort the available trades as per your requirements.

This includes the minimum number of shares you’re looking for per trade and the volume traded in a day. The dark pool data should update itself automatically after every 10 to 15 minutes.



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