Anonymous asked:
You can't say "dark pools" and then not explain it.
They’re not actually as exciting/creepy as they sound, sorry. Exchanges are “lit”, meaning that they display quotes–if you are thinking of buying Apple stock on Nasdaq, they will tell you that you can buy 100 shares at $200.01, 200 more shares at $200.02, etc. Dark pools are like exchanges but not lit–you can send an order to buy AAPL for $200.01, but you won’t know ahead of time if anyone wants to sell to you there or not.
Theoretically, they’re a place where large institutional traders can trade with each other without tipping off high-frequency traders to their orders. In reality, they’re just like a normal exchange where large institutional traders trade with high-frequency traders, except quotes are hidden.