How markets work
Dark pool
A private venue where large orders are matched without being displayed publicly beforehand.
How it works
Institutions use dark pools to trade size without revealing intent. Showing a huge order on a public book moves the price before it fills, which is a direct cost.
Trades are reported after the fact, so they appear in the public record — just not in advance. A meaningful share of volume in major markets executes this way.
Where it misleads people
Because pre-trade interest is hidden, the visible order book understates real supply and demand. Anyone reading depth as the full picture is reading a partial one.
Related terms
- Order bookThe live list of every outstanding buy and sell order, arranged by price.
- Market impactThe extent to which your own order moves the price against you as it executes.
- ExchangeA regulated marketplace where buyers and sellers of securities are matched under published rules.
- Payment for order flowA broker being paid by a trading firm for the right to execute its customers’ orders.
More in How markets work
All 33 How markets work terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.