 In this video, we'll be going over dark pools, everything from what they are, how it works, and more importantly, how do you use it to trade. So what is a dark pool? It's a private financial exchange between buyers and sellers where stocks are traded anonymously outside of the traditional public stock exchanges. And dark pools got their names because orders and trades within them are not visible to the public. These anonymous exchanges or dark pools allow large institutional investors like a mutual fund or a pension fund to buy and sell large blocks of stocks without publicly revealing their intentions. Essentially, it's useful because they could avoid information leakage that is having to reveal their trade to the market before it's even completed. And information leakage is essentially why dark pools exist. When an investor wants to buy or sell a large number of shares, it will affect the price on the open market. And because dark pools are not publicly disclosed, they're not subject to the same market impact. So for example, if a mutual fund wants to sell a million shares of a company stock such as Apple, it might have to do so over a period of days to avoid driving down the price. But if they use a dark pool, the mutual fund can sell those shares all at once without tipping off the market. So as a result, these traders can execute large trades at a better price, which also save them money. So now that we know what a dark pool is, how do dark pools work? So buyer or seller submits in order to a broker, and then a variety of algorithms are used to match orders and facilitate those trades. These algorithms are designed to execute as efficiently as possible, while more importantly maintaining the anonymity of the trader. So we'll also learn that there are two types of dark pools. There's an internal dark pool, which are exchanges run by investment banks, typically only available to their clients. And because they are run by investment banks, they're generally considered to be a little less transparent than external dark pools because they're also not subject to the same regulatory requirements. This had led to some concerns about potential abuse in an internal dark pool. External dark pools, on the other hand, are run by independent firms. And these dark pools are available to qualified traders, such as retail investors and even small investment firms. And because of that, they're subject to greater regular scrutiny and require to disclose more information about their operations. You're probably thinking, if there's so much anonymity and scrutiny around dark pools, why are they even allowed? Essentially, they provide liquidity to the market. They've reduced transaction costs for these large mutual funds because they're conducting such high volume. But they're also minimizing the market impact, which is the main benefit of dark pools. Imagine them selling $100 million of a stock and you see so much volatility in the market. Regulatory measures have also been implemented to increase transparency and reduce potential for the abuse in the market. So some of the regulatory measures that are in place is called, one, the order to trade ratio rule, which requires dark pools to disclose the percentage of orders that are actually executed as trades to ensure that the dark pools are not flooded with a bunch of fake orders. And then we also have the large and scale rule, which requires dark pool traders to disclose large trades that exceed a certain size. And essentially, these large trades or order blocks is what some third-party providers of dark pool information share to us retail traders and is also what is shared in the dark pool channel of the X-Trade server as another tool for you to use in piece of data to inform your trade. So you're probably wondering, how do I use this information? How do I use it to trade? For me personally, I use these dark pool orders as levels that I mark on my chart as potential levels for future resistance or supports on the ticker. And we'll go through a couple of scenarios that could show you how to leverage this information. Okay, so let's use meta as our ticker to show a few dark pool examples today. So currently we have meta at $135.36, and let's say we see a large dark pool order come in through the X-Trade's dark pool channel, saying that there's a large order of $1 million at $135.74. So let's just mark that on our chart. So that means this dark pool level is currently higher than the price of meta on the open market currently. So there are two ways that I could trade this information. So one of these ways is that I would, this person perhaps is getting an early sell order in and expecting more downside. So because the current price is lower than that dark pool order, I would look to see if we have some additional upside or a bounced. And then if we reject off of that dark pool level or around there where there's a local resistance, that would be a good place to enter a short because there's a million shares that are being sold. So it's going to be pretty tough to break through that level. So if it doesn't break through and you see early signs of rejection, this could be the dark pool level is a good area to take a short. The other scenario that could be playing out is using this level for a breakout. So again, if we see meta starting to take a turn, it's no longer downturning. It starts to uptrend and hits this dark pool level. And if we see it, you know, chugging along with a good volume hits that dark pool level breaks through on good volume. I would take a long position because this fire is probably expecting more upside. So two other scenarios that I would play this dark pool level is let's change the dark pool level for a second. So we have, again, meta 135, 36 on the open market. And let's say there's a dark pool order that comes in at 134.52. So meaning it's lower than what the current price is on the open market. So again, you could play it as a short position and both a long position. And how I play as a long position is that this person perhaps got their order in early and is expecting more upside. So what I would look for is for the price to come down from 135 and for it to bounce off of this dark pool level. So I would look for this dark pool level to hold as a support because there is a million dollar buy order sitting there. So once it bounces and I see good volume of this bounce, I would enter a long for continuing to upside here. And then another way that you could play this is for the breakdown. So because we're training higher than the start pull price, this perhaps order is a sell order and they are expecting a full breakdown. So what I would look for is a confirmed break of this level of this dark pool level. And once it does, I would take a short to your lower target, lower short targets. So those are the four ways that you could use your dark pool levels in addition to your support and resistances that you would already have on your chart.