You have got access to the dark pools that have been hidden away from the eyes of the commoners. This must make you feel levitated as the dark pools provide so many opportunities in securities trading. However, we recommend you hold your horses when it comes to the dark pool.
Dark pools are private exchanges with no access to public investment. Due to their complete lack of transparency, you do not know about the stocks and their current status unless the transaction is executed. This leads to so many disputes and conflicts between the owner and the trader. So, in layman’s terms, trading is only possible between an owner and a trader.
For instance, you are a trader in the dark pool exchange and an owner comes to you with 500,000 shares worth a million dollars. What would you do in such circumstances? The basic sense indicates that you purchase those shares and sell them in the future if the shares are reputable. But how would anyone find out about the stock reputation because we already mentioned that there is no transparency?
How DPI for stocks help you in choosing the market sentiment?
To answer the above question, we have three words for you – the dark pool index. It is a dollar-weighted measure that acts as a dark pool indicator just like that of Stock exchange. This index can be easily found if you have spent some while in the dark pool.
The indicator is a strong marker to understand the market sentiments. This allows you to understand if you should purchase stocks or not. Most people love the bullish market because they want to market to stay up and earn profits. So, if the dpi for stocks is on the higher side, the market is bullish. However, some people love the bearish market as they count on the loss of selling shares. In such a case, one must look for a lower dark pool index.