An investment strategy that assumes small investors are always wrong because they react emotionally to the market and are usually guilty of bad timing. In a rising market, a lot of odd lot buying is considered an indication of a technical weakness in the market and a signal to sell. On the contrary, in a declining market, a lot of odd lot selling is seen as an indication of technical strength and a signal to buy. However, studies of odd lot trading have proven that the theory does not have too much substance and that investors trading odd lots of market leader stocks have generally managed to do reasonably well.

This definition is in context to Frauds and Scams. See more contextual defintions for Odd Lot Theory.