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: Option A

Explanation: In simple words, Odd lot trading theory refers to the theory used for technical analysis. It is generally used to analyze the investors who trades in foreign currencies.

It is based on the assumption that most of these traders are wrong in their operations and if most of the small investors are selling their shares then it is a good time to purchase and vice versa.

Hence from the above we can conclude that the correct option is A.