Dark Pools
Private venues where institutions trade size invisibly, away from public order books.
Dark pools are private venues for large institutional orders hidden from public books. They prevent market impact but hide true supply and demand.
Dark pools are private trading venues where institutions execute large orders without displaying them publicly. Hiding size prevents the market impact that showing a million-share order would cause. Regulators allow them within limits, but the opacity means retail never sees the real supply and demand.
How It Works
- Orders match invisibly at midpoint prices
- Prints report to tape after execution
- Regulators cap dark share of volume
Trading Tips
Expect unexplained prints at key levels: dark flow
Do not chase moves starting from dark prints alone
Forex has no tape, so dark-pool logic applies less directly
Dark Pools Example
Say a stock drifts sideways all day then prints a 2-million-share block at the close with no price change. That dark pool cross moved serious size invisibly. Next morning the stock gaps on the news the block anticipated.
How Traders Use Dark Pools
Read late-reported blocks as informed flow and adjust bias, never chase them directly. In forex, translate the lesson: real size hides, so trust confirmed breaks over rumored ones.
Related Terms
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