Google Finance offers various financial data and tools, and you’re likely referring to the LOT attribute specifically related to stock prices. LOT, in the context of stock trading and Google Finance, signifies the standard trading unit for a particular security. While the term “round lot” is more commonly used and universally understood, Google Finance uses “LOT” to essentially convey the same information.
A round lot traditionally represents 100 shares of a stock. This benchmark arose from the historical practice of stock exchanges prioritizing trading in multiples of 100 shares. Trading in round lots often resulted in better pricing and easier execution. Though electronic trading has diminished the strict adherence to this rule, the concept of a standard trading unit remains relevant.
Google Finance doesn’t explicitly display “LOT” next to every price quote. Instead, the implication is that the price shown is generally based on trading activity involving round lots. When you observe the detailed trading data, such as the order book or time and sales information (which Google Finance’s depth of real-time data might be limited on compared to dedicated brokerage platforms), you might discern differences in price for orders significantly smaller than a round lot.
The importance of understanding the “LOT” concept, even within Google Finance’s simplified presentation, lies in recognizing its potential impact on execution. Large institutional investors almost always deal in multiples of round lots. Their orders, driven by sophisticated algorithms, can influence price movements. While retail investors primarily observe the aggregated price displayed on platforms like Google Finance, understanding that this price is largely shaped by institutional activity is crucial.
Therefore, smaller trades (less than 100 shares, often called odd lots) might experience slightly different pricing. This difference, called “price improvement” when you receive better price or “slippage” if worse, occurs due to order routing and market maker dynamics. However, thanks to modern trading platforms striving for best execution, these price discrepancies for small orders are often minimal.
Keep in mind that Google Finance, while a helpful resource for basic financial information, shouldn’t be the sole platform for making critical investment decisions. For in-depth order book analysis, real-time Level II data, and precise execution, a brokerage platform equipped with advanced trading tools is essential.
In summary, when using Google Finance, understand that the stock prices displayed are generally based on transactions involving round lots (multiples of 100 shares). While the “LOT” attribute isn’t prominently featured, the underlying concept helps to understand market dynamics and the potential impact of order size on pricing.