You Want to Buy 37 Shares? Not in This Board Lot

A board lot is a unit of shares that is often utilized by a stock exchange. If you are a stock trader, you need to understand the concept of board lots and how they work.

Board Lot

A board lot is a standard unit of shares that can be traded on a stock market. For example, a stock exchange might mandate that everyone trades in increments of 100 shares. Typically, a stock exchange will have different board lot sizes for different prices of stock. For example, if a stock is priced at a dollar or less per share, you might have to trade as many as 1000 shares at a time. However, some of the higher priced stocks might trade at sizes of 100 shares per lot.

Why They Exist

The purpose of board lots is to make things easier and improve trading for everyone. If you know that you have a certain amount of shares in each lot, it will be much easier for brokers to match up sellers and buyers. However, if you have someone who wants to buy an odd number of shares, it can be difficult to find a seller for that exact amount. Having board lots increases liquidity and improves order fulfillment.

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