What is a retail trader?
In one line: A retail trader is an individual who buys and sells with their own money through a broker, rather than for a fund, bank or company.
The short answer
If you open an account with a broker and trade your own money, you're a retail trader.
The other big group is institutions: pension funds, mutual funds, banks and hedge funds. They trade money for other people, in much larger sizes. See Institutional investor.
How they compare
| Retail trader | Institution | |
|---|---|---|
| Whose money | Your own | Clients, members or the firm |
| Typical order size | Shares to hundreds of shares | Thousands to millions |
| Speed of getting in and out | Usually instant | Often days, to avoid moving price |
| Rules they answer to | Your broker's and the law | Many more: clients, regulators, mandates |
A simple example
You have a $5,000 account and buy 20 shares of a $100 stock. Your order fills in a second. It doesn't move the price at all.
A fund wants 2 million shares of the same stock. Buying them all at once would push the price up on itself. So it buys slowly, over days or weeks.
Why it matters
Retail traders have real advantages:
- Size. Small orders get in and out without moving the price.
- Freedom. No boss, no client, no rule that says you must be in the market. You can sit on your hands.
- Choice. Pick your own markets, Timeframe and style.
The main limits are money, time and information. Rules help too. The old $25,000 PDT rule minimum for day trading in US margin accounts was eliminated in 2026, so check your broker's current rules.
A common mistake
Trying to act like a big fund. Institutions spread risk across hundreds of positions and have teams watching them. A retail trader with one big trade has no such cushion.
The retail edge is patience. Wait for clean setups, risk a small fixed slice, like 1% a trade, and skip everything else. Our guide on how much to risk per trade shows the math.
"Retail" isn't an insult. It just means you trade for yourself.
Questions
What percentage of the market is retail?
Estimates vary a lot by market, year and how it's measured, so be wary of any single number you see.
Can retail traders trade futures and forex?
Yes, through brokers registered for those markets. In the US, retail forex leverage is capped at 50:1 on major pairs and 20:1 on others.
Do institutions trade against retail traders?
Not on purpose, in most cases. Markets match many buyers and sellers. Your order is usually too small to matter to a big fund.
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