# Round lot

Round lot is a standard trading quantity for a security; for many US stocks it has traditionally been 100 shares, but the applicable size can vary by security and market.

## What it means

A round lot describes an order quantity in standard-sized units rather than a particular dollar value. For many US stocks, the familiar unit is 100 shares. That is a convention, not a universal rule: the applicable size can differ by security or market, and US quotation rules may use a security-specific round-lot size.

An order can contain several complete round lots. Any shares left over form an odd-lot portion. A quantity smaller than one applicable round lot is an odd lot. These labels describe share counts; they do not say whether an order is likely to receive a favorable price or be filled.

## How it is calculated

First, identify the applicable round-lot size for the security and market. Then divide the proposed share quantity by that size:

`Q = L × R + O`

- `Q` = total order quantity, in whole shares.
- `L` = number of complete round lots, a nonnegative whole number.
- `R` = applicable round-lot size, in shares per lot.
- `O` = remaining shares, where `0 ≤ O < R`.

Equivalently, `L = floor(Q / R)` and `O = Q − (L × R)`. The `floor` function rounds down to the nearest whole number. If `O = 0`, the whole-share quantity is an exact multiple of the round-lot size. A round lot counts shares, not US dollars: multiplying shares by a share price gives an order's approximate value, not its lot classification.

## Worked example

Assume a hypothetical stock has an applicable round-lot size of 100 shares and a hypothetical price of US$20 per share. These numbers are only for illustration.

1. A proposed order for 250 shares has `R = 100` and `Q = 250`.
2. Dividing 250 by 100 gives two complete lots: `L = 2`.
3. The remainder is `O = 250 − (2 × 100) = 50` shares. The order contains two round lots plus a 50-share odd-lot portion.
4. At US$20 per share, its approximate share value is `250 × US$20 = US$5,000`, excluding execution costs.

For comparison, 300 shares would be three complete 100-share lots with no remainder. Changing the hypothetical price would change the order value, but not those share-count calculations.

## Why it matters before you trade

Lot size helps you read quotes and order-book quantities correctly. A displayed quantity expressed in lots must be converted to shares using the applicable lot size; assuming every lot means 100 shares can misstate the displayed depth. Quote-display conventions and order-handling rules can also differ for round-lot and odd-lot quantities.

Check the proposed quantity against the security's lot convention and your broker's order-entry rules. An odd-lot portion is not automatically invalid or more expensive, but a visible quote is not a promise that the full order will fill at one price. The bid-ask spread, available depth, order type and participation in trading volume are separate execution considerations.

## How PreTrAIde uses it

PreTrAIde's published product facts do not state that it classifies orders as round lots or applies a round-lot rule. Its pre-trade analysis instead starts with the quantity and execution conditions the user enters for each stock in a basket. Its quantitative layer estimates the bid-ask spread, participation in daily volume and market impact, among other measures. Those checks relate to the size and potential execution costs of a proposed order, whether its quantity is an exact multiple of a round lot or not.

PreTrAIde returns a GO, NO-GO or MODIFY verdict as decision support before an order is placed. It does not receive, transmit or execute orders; users trade through their own brokers.

## Common mistakes

- Treating 100 shares as the round-lot size for every security and market.
- Confusing a round lot with US$100 worth of stock; it is a share-quantity unit, not a monetary unit.
- Calling an entire 250-share order an odd lot when the applicable size is 100 shares: only its 50-share remainder is the odd-lot portion.
- Assuming an exact round-lot quantity guarantees a fill or a particular execution price.
- Using lot classification as a substitute for checking spread, market depth, market impact and broker order rules.

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Source: https://pretraide.com/glossary/round-lot