Are Dark Pool Trades Buys or Sells?

Unlike options orders where a market maker can easily create a trade out of nothing by simply “writing” it, equity shares cannot be created.

Why is this important?

The bid and offer are significant on options orders because they clearly indicate whether the order is a buy or a sell.

However, because equity shares cannot be created, every transaction has a buyer and a seller.

And due to the nature of how orders are filled in dark pools, the order side (bid, mid, or ask) can actually be misleading.

That means the order side isn’t important for dark pool trades (and why we don't show it).

Instead, what’s important is the price action following a large trade.

Paying attention to the spot price of the order is the best way to tell if it was executed with a bullish or bearish intent.

• Trade executed with a spot price below the nearish resistance level and then breaks above it is a bullish signal.
• Trade executed with spot price above the nearest support level then breaks below it is a bearish signal