a complete understanding of

Dark Pool Trading

Dark pool trading isn't new, but the interest in what it is and how it affects the markets has grown rapidly in recent times. There is a mystique associated with it and there are some big names out there that will try to sell you their program to learn how to decipher the "secrets" and what it all means. The good news, is that you can learn what dark pool trading is all about for free, right here at Trade Talk Media!

What is Dark Pool Trading?

Simply put, dark pool trading is how the big institutions can complete large transactions without having to pull liquidity from the markets you and I trade from. These transactions occur on private exchanges, hiding the intentions of the trade from public scrutiny. These transactions have to be reported, but not necessarily the moment they are made. So, big institutions can typically make these large transactions without the public knowing that they are building or unloading a sizable position. Until now!

Why Does Dark Pool Trading Exist?

Think about this... Let's say a large firm is trying to buy one million shares of stock. If it was known that this large order was going through, other people owning that stock might want to buy more and those who don't have a position might want to start one. Opening such large positions with others following suit would drive the price of the stock up. The longer it takes to open that size of a position, the worse the price would be with each new fill. The orders flooding the market would be driving the price up as the position is being accumulated. By trading on a private exchange, this position can be purchased privately without having to be reported until after the transaction is already complete. As a private transaction, this prevents other traders from following that firms order, and therefore driving the price up or down, until after that firm is already in or out of their position.

How Do We See These Transactions If They Are Private?

Dark pool transactions are required to be reported, just not necessarily at the time of the transaction. This hides the intentions of the big firms. The good news for us, is that we have a scanner that will find these transactions, once they are reported by the exchanges. We are using the same scanner as our Unusual Options Activity scanner, Blackbox Stocks.

What this scanner does is find these transactions as they are reported to the exchanges, in REAL TIME! So, once the transaction is reported, this scanner displays it immediately. We can finally see when these transactions are recorded, without being a member of those private exchanges.

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Are The Transactions Buys Or Sells?

This is where the mystery of Dark Pool trading comes in. Regardless of what some people tell you, there is just no way to tell if these transactions are buys or sells. We simply see that a transaction occurred and at what price. We DO NOT KNOW if these are opening or closing transactions by the big firms. I'll repeat that, WE DO NOT KNOW IF THESE ARE BUYS OR SELLS. Some personalities will try to convince you they know. But no one does, unless you're one of the parties in the actual transaction.

How Do We Use This Info?

Since we don't know if these are opening or closing transaction, everyone has the same question, "So, how do we actually use this info?" We use this scanner to see where these transactions come in. This is the first company to accumulate this dark pool info and actually integrate it into a live chart. As these transactions are reported, we see it in a list as well as directly on the chart. Since we don't know if these are buys or sells, what we are doing is watching to see how the stock reacts around these levels. We are essentially using these levels as potential support or resistance. Sometimes it takes a few days for these levels to play out. So, trying to say the price bounced up from a level so the dark pool had to be a buy just isn't accurate. It might be a few days or even weeks to see these levels play out.

Here is a video from Dark Pool Mel Stone that goes into detail about how she uses dark pool information in her trading. It is long, but there is some great information in there. Clicking below will take you to YouTube.

What's The Next Step?

If you want to learn dark pool trading from some of the best in the industry, click this link to join the Blackbox Stocks trading team. CLICK HERE FOR 20% OFF YOUR FIRST MONTH WITH BLACKBOX STOCKS If you decide to join them, send us an e-mail and we'll make sure you are in touch with the right people to teach you the ins and outs of this form of trading so you're not trying to learn it on your own. They have a dedicated team to help teach how to be successful with Dark Pool Trading.