Key Takeaways
- Round lot equals standard trading unit, usually 100 shares.
- Promotes market efficiency and liquidity through standardized sizes.
- Odd lots are smaller, often bundled by brokers today.
- Price-based round lots adjust by share price since 2025.
What is Round Lot?
A round lot is a standardized trading unit of securities, typically consisting of 100 shares of stock or multiples thereof, designed to simplify trading and increase market efficiency. This convention helps standardize order sizes on exchanges and originated from early market limitations in technology and logistics.
Round lots are widely recognized across markets to facilitate smoother transactions and clearer pricing, impacting how orders are matched and displayed in order books.
Key Characteristics
Round lots have distinct features that make them central to trading operations:
- Standard Size: In the US, a round lot usually equals 100 shares, though exchanges may adjust this based on price tiers.
- Odd Lots: Any quantity below a round lot is called an odd lot, which historically traded differently but are often bundled by brokers today.
- Market Display: Exchanges use round lots for quoting bid, ask, and last trade sizes, enhancing transparency.
- Varied by Security: For bonds, round lots are often defined by face value amounts, typically $100,000.
How It Works
Round lots serve as the baseline for most stock trades, allowing buyers and sellers to transact in predictable, standardized quantities. This standardization supports efficient price discovery by simplifying order book depth and liquidity measures.
Since November 2025, US exchanges have adopted price-based round lot sizes, adjusting the definition according to a stock's share price. For example, stocks priced above $1,000 now have smaller round lot sizes to reflect their higher value per share, improving market transparency and adapting to modern volatility.
Examples and Use Cases
Understanding round lots helps in practical trading scenarios, especially when dealing with high-volume or high-priced stocks:
- Technology Stocks: Purchasing 300 shares of Apple means buying 3 round lots, simplifying order execution compared to odd-lot orders.
- Streaming Services: High-priced stocks like Netflix now use smaller round lot sizes (e.g., 10 shares) based on price, reflecting the new pricing tiers.
- Trading Strategies: Investors using commission-free brokers can more flexibly manage odd and round lots without incurring higher costs historically associated with odd-lot trades.
Important Considerations
While round lots remain central to market mechanics, electronic trading has reduced their strict enforcement for retail investors, allowing purchase of any share quantity. However, institutional systems and exchanges still rely on round lots for quoting and execution.
Be aware that changes in round lot standards, such as the shift to price-based sizes, can affect how order sizes are displayed and executed, impacting your trading strategy and portfolio management.
Final Words
Round lots simplify trading by standardizing order sizes, which enhances liquidity and market efficiency. To optimize your trading strategy, consider aligning your orders in round lot increments when possible to benefit from smoother execution and potentially lower costs.
Frequently Asked Questions
A round lot is a standardized trading unit of securities, typically 100 shares of stock or multiples of 100. It simplifies trading and helps standardize order sizes across exchanges for greater market efficiency.
Round lots promote liquidity and ease of trading by encouraging larger, standardized trade sizes. They help exchanges match buy and sell orders more efficiently and make portfolio management simpler for investors.
A round lot consists of a standard number of shares, usually 100, while an odd lot is any quantity smaller than a round lot, like 23 shares. Odd lots were historically traded separately but are now often bundled by brokers.
No, round lot sizes vary by security type and exchange. In the US, most stocks use 100 shares as a round lot, but recent regulations have introduced price-based round lot sizes that adjust based on the stock's price.
Since November 2025, US exchanges use price-based round lot sizes for National Market System stocks, ranging from 100 shares for stocks under $250 to just 1 share for stocks over $10,000. This change improves transparency in bid/ask sizes.
Yes, modern electronic trading allows retail investors to buy any number of shares, even less than a round lot. However, institutional trading and exchange systems still reference round lots for quoting and order execution.
Historically, odd lots often incurred higher per-share commissions, but many modern brokers minimize or eliminate these extra costs, making odd lot trading more accessible and affordable.
When an investor buys 300 shares of a stock like Apple, it is considered buying 3 round lots of 100 shares each. This standardization makes it easier to place and execute orders compared to trading odd lot sizes.
