Odd lots, or small quantities of stock traded outside of regular market hours, have become an increasingly significant portion of US share trading, according to data from Goldman Sachs. In 2019, odd lots accounted for just 31% of total shares traded, but this figure has jumped to 66% in recent times. This shift is particularly pronounced in the S&P names priced between $100 and $1,000, where odd lots now make up a staggering 78% of trading activity.

So why are odd lots becoming more popular? One reason could be the growing influence of retail investors in the market. With the rise of online trading platforms and mobile apps, it’s easier than ever for individual investors to buy and sell stocks outside of regular market hours. Additionally, the COVID-19 pandemic has led to increased volatility in financial markets, making it more challenging for institutional investors to make informed trades during regular market hours. As a result, they may turn to odd lots as a way to manage risk and capitalize on opportunities outside of traditional trading hours.

Another factor driving the growth of odd lots is the increasing popularity of algorithmic trading strategies. These strategies rely on complex algorithms to analyze market data and make trades based on statistical patterns and probability. While these strategies can be highly effective, they often rely on real-time data feeds, which may not be available during regular market hours. As a result, odd lots provide a way for algorithmic traders to continue executing trades outside of traditional trading hours.

The rise of odd lots has significant implications for the US stock market. For one, it highlights the growing influence of retail investors in the market, who are increasingly able to participate in trading activity outside of regular market hours. Additionally, the increased reliance on odd lots could lead to greater volatility and liquidity in financial markets, as these trades can have a significant impact on stock prices even outside of traditional trading hours.

In conclusion, the growth of odd lots in US stock trading is a significant development that highlights the changing nature of the financial market landscape. As retail investors continue to drive the growth of odd lots, it will be interesting to see how this trend evolves in the coming years and how it impacts the overall health and stability of the US stock market.