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How To Find Out If A Large Block of Stock is About To Be Dumped on the Market

By Jason Markum

I love stock market investing. It’s a passion of mine, make no mistake about it. But it can be incredibly dangerous if you’re not careful. Make just one little mistake… just one error in judgment about a particular stock and you can see years of hard work and careful savings evaporate in the blink of an eye, or even faster!

Because of this, I’m of the opinion that every little trick, or tip, or inside track that I can get a hold of that will help me make better decisions about my stock market portfolio is something that I’m going to spend a lot of time trying to find.

One signal that you can often take advantage of to make some money, or protect yourself and your portfolio is major block share trades. Very often, large blocks of shares are sold on the stock market or are bought on stock market. Determining that these block shares are about to be traded before hand can give you a substantial leg up over everybody else and hand you a chance to make some nice money very quickly, or protect yourself very quickly whichever the case.

For instance, if you know before hand that a large block of shares are about to come up for sale, you may sell your shares quickly at the current high price because whenever a large block of shares comes up for sale, the price often drops because there aren’t as many buyers for large blocks. When there aren’t many buyers, the only thing to do is to drop the price until there ARE buyers. If you know about this before hand though, you can sell your shares at the current price, and buy them back at the depressed price later that day or within the next week or so..pocketing the difference.

The opposite holds true if you find out that large block of shares is about to be purchased. Whenever there are more buyers than sellers, the price goes up. So if you can buy shares before somebody else tries to buy a large block, then you can sit back and watch the price rise and sell your original shares after the price has risen once the new block has been bought.

So how do you find out if large blocks of shares are about to be bought or sold on the stock market? That’s the million dollar question!

The first thing you want to do is watch mutual funds. These entities by definition move in large blocks of stock because they’re buying and selling for hundreds or thousands of individual investors at the same time. They just don’t move in little blocks. Mutual funds won’t advertise that they’re about to buy or sell large blocks, but many times this information sort of leaks out and if you’re careful and pay attention, sometimes you can get wind of it.

Watch the trading range of different issues because a major indication that the block is about to come up for sale is that you will see a quick shrinkage of the trading range.

If you get into the habit of watching out for these particular things it can get much easier, and you might be surprised how much fun it is to sniff them out!

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