Dark Pool
Where the whales trade without moving the market
Definition
A dark pool is a private exchange or forum for trading securities, away from public stock exchanges. Large institutional investors use dark pools to execute large orders without moving the market price — if a $500 million trade appeared on a public exchange, it would immediately signal the market and cause price impact. Dark pools report trades to regulators but do not display order book information publicly. They account for roughly 15–20% of U.S. equity trading volume.
Example
A pension fund wants to sell 5 million shares of Apple. Executing on the NYSE would cause the price to drop as the market absorbs the selling pressure. Instead, they use a dark pool to find a willing institutional buyer, execute the trade at the last public price, and only report the trade afterward. No public impact, no adverse price movement.
Related Terms
Frequently Asked Question
What is a dark pool?
A dark pool is a private trading venue where large institutions execute trades without showing orders publicly. It prevents price impact from large trades. Dark pools account for 15-20% of U.S. equity volume.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.