Dark pool
Definition · Level 6 · Desk language
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Trading venue with no pre-trade displayed quotes; orders match invisibly, often at the NBBO midpoint, and trades are reported to the tape afterwards.
Example
50,000 shares cross at 20.02 inside a 20.00/20.04 market.
Where Tradecraft teaches it
Level 6 · Desk language, in the lesson “Market microstructure”: Who is on the other side of your trade, where it happens and how it shows up on the tape.
Related terms
- Adverse selectionThe risk that whoever trades with you knows more than you do, so the trades you get are the ones that hurt; the tell is repeated one-way flow.
- Block tradeA single very large transaction — far bigger than normal screen size — usually negotiated privately and executed off the order book, often at a…
- Closing auctionEnd-of-day single-price cross on the listing exchange that sets the official closing price; index funds and market-on-close orders concentrate there.
- Iceberg orderA large order that displays only a small visible slice; each time that slice fills, a fresh one appears from the hidden reserve.
- Maker-takerExchange pricing that pays a rebate to orders adding resting liquidity and charges a fee to orders removing it.
- PFOFPayment for order flow: a wholesaler pays a retail broker to route it customer orders, which it fills itself, often with slight price improvement.