6th Dec 2009 by Amelia Timbers
Block trades are very much what they sound like; a position taken using a large block of stock. For example, block trades occur when an investor buys, sells or shorts with a large, valuable proportion of a firm's stock. Block trades are typically identified by their ability to affect the price of a security by that trade alone. For example, when hedge funds take positions, it is sometimes with millions of millions of dollars at once, which can either hammer down the value of a stock (if they sell or short) or raise it (if they buy). There isn't a specific threshold for how much stock it takes before you've got a block trade, but if you can move the market in one position, you're likely trading in blocks. As a result, block trades are tools of the owners of large amounts of equity such as hedge or mutual funds, institutional investors, or high net worth investors.
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