Dark Pool

Definition

Dark Pool in plain English

Imagine you want to sell a huge pile of shares, but if everyone on the public exchange sees that giant sell order coming, they'll drop their prices and you'll get a worse deal. A dark pool is a private trading venue that solves this by keeping orders hidden until after they're matched — 'dark' just means the orders aren't displayed in advance. It's like selling a valuable item through a discreet broker who quietly finds a buyer, rather than posting it on a public board where the crowd can react and work against you; the trade still gets reported afterward, it just isn't advertised beforehand.

Learn these first

• Front-Running

Related Market Microstructure terms

• Access Rule (Rule 610)
• Adverse Selection
• Algorithmic Trading
• Amihud Illiquidity Measure
• Arbitrage
• Ask (Offer)
• Best Execution
• Bid
• Bid–Ask Bounce
• Bid–Ask Spread