Retail investor
Retail vs. Institutional Investor
An individual trading their own money in small volumes — the counterpart of the institutional investor (funds, pension managers, banks) who trades at large scale professionally.
What it is
Retail investor (individual investor) buys and sells stocks with their own money, typically through a brokerage app, in amounts ranging from a few thousand to tens of thousands of dollars per trade.
Institutional investor (funds, pension managers, insurance companies, banks) trades on behalf of clients or the institution, in the millions to billions range, with access to deeper analysis and direct contact with company management.
The difference also shows in behavior: retail investors tend to be pro-cyclical (buying at the peak of euphoria, selling in panic) and more sensitive to social media sentiment; institutional capital tends to be more disciplined, though not immune to herd behavior.
Why track it
The share of retail volume in total trading is a sentiment signal — a high retail share in speculative stocks often precedes heightened volatility. A special category is coordinated retail buying of heavily shorted stocks, which can trigger a short squeeze (see market microstructure).
Real-world example
GameStop (January 2021): coordinated buying by a community of individual investors on Reddit against a heavily shorted stock triggered a short squeeze from $17 to $483 within two weeks — while the company's fundamental value had not changed.
Watch out for
"Retail" in this sense (individual investor) is easily confused with "retail" as an industry (retailer, retail sector) — these are two completely unrelated meanings of the same word.