Individual Traders (“Retail”) in the US Stock Market [Facts, Figures, Statistics]

We look at the current level of participation by individual, or “retail,” traders and investors in the United States stock market. 

We look at historical trends of retail investor involvement, current estimates of their market share, the impact of online trading platforms, and considers the activity of retail investors across major stock exchanges. 

We’ll also discuss emerging trends in retail investing and offers a perspective on the future influence of this increasingly important segment of the market.

Key Takeaways – Individual Traders (“Retail”) in the US Stock Market 

• Recent data shows a significant increase in retail investor activity, particularly since the onset of the COVID-19 pandemic in 2020. 
• Precise figures vary across different sources and measurement periods, but estimates suggest that retail investors currently account for approximately 15% to 25% in US markets.
• This surge in participation has been largely facilitated by the proliferation of online brokerage platforms and the advent of commission-free trading. 
• The consistent observation of increased retail participation across numerous independent reports and surveys since 2020 shows a fundamental alteration in the dynamics of the US stock market. 
• This period coincided with unique global events, such as the pandemic, which contributed to this shift. 
• Precisely quantifying this segment has challenges and shows that the methodology and the specific timeframe under consideration can influence the results.

Defining Retail Investor Activity and Measurement Metrics

In the context of the stock market, a retail investor is typically defined as an individual who buys and sells securities for their own personal account, rather than as part of a larger financial institution such as a pension fund, hedge fund, or mutual fund. 

Quantifying the activity of these investors within the broader market requires the use of various metrics, each providing a different perspective on their involvement.  

Trading Volume

One of the most commonly cited measures of market activity is trading volume, which represents the total number of shares of stock that are bought and sold over a specific period. 

This metric is widely used to gauge the overall level of activity in the market and the participation of different investor segments. 

However, focusing solely on the number of shares traded might not fully capture the economic significance of different types of traders and investors. 

For instance, institutional investors often trade in much larger volumes compared to individuals.  

Number of Trades

Another important metric is the number of trades, which counts each individual transaction executed. 

This can provide insights into the frequency of trading by retail investors, but the increasing prevalence of algorithmic trading introduces complexities.

Algorithms used by institutional investors can automatically break down large orders into numerous smaller trades to optimize execution, which can make these trades appear similar in size to those of retail investors.

This blurring of lines necessitates caution when interpreting data based solely on the number of trades.  

Notional Value

The dollar value of trades, also known as the notional value, offers another dimension for understanding market activity.

This metric represents the total monetary value of the shares traded and can provide a more accurate reflection of the actual “size” of the market and the amount of capital being exchanged.

For example, a high volume of trading in low-priced stocks by retail investors might not have the same overall market impact as a lower volume of trades in high-value stocks by institutional investors.

Therefore, considering the notional value alongside trading volume can offer a rounder understanding of market dynamics.  

Accurately defining and measuring retail investor activity is challenging.

The increasing sophistication of trading technologies, including algorithmic execution, and the fragmentation of trading across various market venues make it difficult to definitively categorize every trade.

Some studies have used order size as a proxy for distinguishing between retail and institutional trades, with a specific dollar amount (e.g., $20,000) used as a cutoff point (source).

However, as noted earlier, algorithmic trading can complicate this approach.

So, a multi-faceted approach that considers various metrics and acknowledges the evolving reality of trading practices is needed for gaining a clear picture of retail investor participation.  

Historical Trends in Retail Investor Participation

Prior to 2020, estimates generally placed the share of total trading volume attributed to retail investors at around 10%-15%. However, this experienced a notable shift starting in 2020.  

A surge in retail investor activity became particularly evident during the COVID-19 pandemic.

By 2021, multiple reports indicated that retail investors comprised approximately 25% of total equities trading volume, representing a near doubling of their market share compared to the preceding decade.

This elevated level of participation has persisted into subsequent years, with data from early 2023 and 2024 suggesting that retail investors continue to be more influential in the market.  

Contributors to This Trend

Several key factors have contributed to this notable increase in retail investor participation.

The rise and widespread adoption of online and mobile brokerage platforms have significantly lowered the barriers to entry for individual investors.

These platforms offer user-friendly interfaces, making it easier for individuals with varying levels of financial expertise to access the stock market.

Furthermore, the introduction of commission-free trading by many of these platforms has substantially reduced the cost of participating in the market, attracting a larger pool of investors.

The increased availability of market information and analytical software (e.g., VaR/risk metric calculations, backtesting, charts) through these digital platforms has also empowered retail traders to make more informed trading decisions.  

The unique circumstances of the COVID-19 pandemic further amplified this trend.

Stay-at-home orders led to increased leisure time, while government stimulus measures and reduced spending opportunities resulted in higher savings rates for some individuals.

The volatility observed in the stock market during this period also likely attracted those seeking potential trading opportunities. After all, traders need movement in markets.

Additionally, the influence of social media and online communities was influential. This contributed to discussions around specific stocks and contributing to phenomena like the “meme stock” frenzy.  

The confluence of these factors suggests that the pandemic acted as a powerful catalyst, accelerating a trend of increasing retail participation that was already in motion due to advancements in technology and the reduction of trading costs.

The fact that retail activity has remained elevated even after the initial peak of the pandemic indicates a potentially lasting shift in investor/trader behavior and the structure of the market, rather than a temporary surge.

The emergence of meme stocks further shows the potential for collective action among retail investors to influence market prices, sometimes independent of traditional financial analysis (e.g., GameStop and AMC).

Current Estimates of Retail Investor Market Share

Getting a precise, real-time figure for the percentage of US stock market trading volume attributable to retail investors is challenging because a) it changes and b) there are the different methodologies used by various data providers.

Nonetheless, we can look at recent reports and studies to provide a range of estimates.

• According to Bloomberg Intelligence, retail investors accounted for over 22% of total trading volume in 2021.
• In contrast, data from Morgan Stanley suggests a slightly lower daily figure, with individual investors representing around 10% of trading volume on any given day.

It’s important to note the difference in the timeframe of these estimates, with Bloomberg Intelligence providing an annual figure for 2021 and Morgan Stanley offering a snapshot of daily activity.  

Academic research conducted around the same period also indicates a substantial increase in retail participation.

• One study noted that by 2021, retail investors comprised 25% of total equities trading volume, nearly double the percentage reported a decade prior.
• More recent data from Global Trading in early 2023 estimated the share of US retail investors in total US equity market volume to be approximately 15%.
• Around the same time, the Forbes Finance Council reported that retail trading reached a high of about 23% of trading volume during one week early in 2023.  
• Looking at more recent data, SIFMA (Securities Industry and Financial Markets Association) reported in 2024 that retail investors accounted for 17.9% of total equity volumes, suggesting a stabilization around this level for the past three years.
• Data from Cboe EDGX, a specific exchange, showed an average retail volume of 20% from January to August 2024.
  • However, when considering retail volume on EDGX as a percentage of the total market volume, it peaked at 2.2% in the second quarter of 2024.  

The variation in these estimates shows how hard it is to measure retail activity and highlights the potential impact of different methodologies, timeframes, and data sources.

It suggests that the level of retail participation is not a fixed number and can fluctuate depending on market conditions and investor sentiment.

The lower daily estimate from Morgan Stanley compared to the annual averages might indicate that while retail investors have a significant overall presence, their daily trading volume could be more concentrated on specific days or during particular market events.

Furthermore, the data from Cboe EDGX illustrates that the concentration of retail trading can vary across different exchanges.

So, to sum up these figures in a more organized way:

The Role of Online Brokerage Platforms

The significant increase in retail investor activity in recent years is inextricably linked to the rise and evolution of online brokerage platforms.

These platforms have fundamentally reshaped how individuals access and participate in the stock market.  

One of the most transformative aspects of online brokerage platforms has been their ability to lower the barriers to entry for new traders/investors.

Traditional brokerage services often required substantial minimum account balances and charged significant commissions per trade, making investing less accessible to individuals with limited capital.

In contrast, online platforms typically offer low or no minimum account requirements and provide user-friendly interfaces, often through intuitive mobile applications.

This ease of use and accessibility has attracted a new generation of investors who might have previously been excluded from the market.  

The advent of commission-free trading has been another key development. These platforms have significantly reduced the cost of frequent trading, which makes it more appealing for individuals to actively manage their portfolios and engage in short-term trading strategies.

This has likely contributed to the overall increase in trading volume attributed to retail investors.

Furthermore, many online platforms provide access to advanced trading tools (of various sorts), charts, real-time market data, and educational resources, which gives retail investors information that was once primarily available to professionals.  

The introduction of fractional share trading by some platforms has further democratized investing so people can start trading or investing with less money (even under $100).

This feature allows investors to buy a fraction of a share of a company, enabling individuals with smaller amounts of capital to invest in high-priced stocks that would otherwise be unaffordable.

This has broadened participation and allowed retail traders/investors to diversify their portfolios even with limited funds.  

The emergence of “neobrokers,” characterized by their mobile-first approach and focus on younger demographics, has also been influential.

These platforms often use gamified interfaces and leverage social media trends to attract new investors, particularly younger millennials and Gen Z.

While successful in increasing participation, this approach has also drawn scrutiny regarding its potential to encourage excessive trading and risk-taking among inexperienced investors.  

Challenges

The growth of online brokerage platforms has not been without challenges and regulatory considerations.

The “payment for order flow” (PFOF) model, where brokers receive fees from market makers for directing customer orders to them, has come under increasing scrutiny.

Concerns have been raised about whether this practice always ensures the best possible execution price for individual traders. This has led to regulatory inquiries and debates about potential conflicts of interest.  

The influx of new retail investors through these platforms has also shown the importance of investor education and risk disclosure.

Regulatory bodies and the platforms themselves are increasingly focusing on providing resources to help traders/investors understand the risks associated with stock market investing and to promote more responsible trading practices.

The fact that a significant majority of retail investors now use digital platforms for their trading activities (e.g., 90% according to one study) shows how influential they’ve become.

Retail Investor Activity Across Major Exchanges

Understanding the extent of retail investor activity across major stock exchanges like the New York Stock Exchange (NYSE) and NASDAQ provides further granularity to the overall picture.

While direct, consistently reported percentages of retail equity trading volume on the NYSE aren’t readily available in the studies/sources we’ve linked in this article, we still have some idea.

The NYSE acknowledges the role of both institutional and retail investors in key market events such as the closing auction, which represents a substantial portion of daily trading volume.

Data indicates a notable increase in retail participation within the options market on the NYSE, with retail share peaking at 48% in July 2022 and remaining high at 45% in July 2023.

Furthermore, analysis of after-hours trading on the NYSE reveals a growing presence of “retail-sized” trades, particularly in small- and mid-cap stocks.

The NYSE defines “retail-sized” trades as those involving 0-10 shares for equities priced above $1,000 and 0-50 shares for equities priced at or below $1,000.

This suggests that while a precise percentage of overall retail equity volume might not be explicitly stated, individual investors are actively engaging in specific segments of the NYSE market.  

NASDAQ has taken a more direct approach to tracking retail investor activity through its US Retail Equities Flow (UREF) data product.

This tool monitors over $30 billion USD in daily retail flows across a wide range of US-traded stocks, ADRs, and ETPs.

This provides a measure of the substantial dollar value of retail trading on the NASDAQ, but it doesn’t directly translate to a percentage of the exchange’s total trading volume.

Nevertheless, they estimate that the retail share of volumes reached as high as 25-30% during the period of 2020-2021.

NASDAQ also conducts surveys and develops indicators aimed at understanding retail investor behavior and sentiment.

One report from NASDAQ indicated that daily retail trading remained strong at just over $34 billion per day in the fourth quarter.

Similar to the NYSE, NASDAQ also provides overall market volume statistics, but these are not typically broken down by investor type in publicly available summaries.  

The available data suggests that obtaining precise, exchange-specific percentages of retail equity trading volume can be challenging, but individual investors represent a significant and growing segment of activity on both the NYSE and NASDAQ.

The focus of data collection and reporting might vary between the exchanges, with the NYSE highlighting retail participation in options and after-hours trading, and NASDAQ offering a dedicated data product to track retail equity flows.

The differences in emphasis might also reflect variations in trading patterns or preferences of retail investors on the two major exchanges.

Trends and Future Outlook for Retail Investing

So, despite concerns about inflation, housing costs, student loans, and other things holding back those just starting out…

Younger demographics, particularly Gen Z and Millennials, are increasingly participating in the stock market.

There’s a growing interest among retail investors in ETFs, likely driven by their diversification benefits and lower costs.

Participation in options trading, especially in short-dated options (e.g., 0 DTE), has also seen a rise, indicating a potential appetite for more active or speculative trading strategies.

Thematic investing, focusing on sectors like FinTech and cryptocurrencies, is also gaining traction among retail traders.

Some data suggests a tendency for retail investors to follow market trends and exhibit increased risk appetite during certain periods.

However, more recent reports from 2024 indicate a potential conservative shift in overall investment strategy among retail investors.

Finally, there has been a notable increase in trading activity in low-priced stocks, often referred to as subdollar securities. Sometimes they’re called penny stocks.

Looking ahead, the participation of retail investors in financial markets is expected to continue its growth.

The ongoing advancements in technology and the continued accessibility offered by online platforms will likely remain key drivers.

Economic conditions and market volatility will also have a role in influencing retail investor sentiment and activity.

The regulatory landscape will continue to shape how retail investors interact with the market, with ongoing discussions and potential changes related to areas like order execution and risk disclosure.

The increasing collective influence of retail investors on market movements and the valuations of public companies is becoming more apparent.

Chinese and Korean, for example, are more driven by retail traders and have more momentum-driven moves to reflect the behavioral tendencies of this segment. Though US markets are seeing a higher influx of retail money, institutional flows still dominate.

The growing involvement of younger generations in the stock market suggests a long-term trend of increasing retail participation, potentially leading to a more democratized and dynamic market in the years to come.

The rising popularity of ETFs among retail investors indicates a preference for diversified investment strategies.

However, the increased interest in short-dated options and subdollar securities might also point to a segment of retail investors engaging in higher-risk trading activities.

This could make any bump in retail activity cyclical. When people get burned from a “hot market” that leads to unsustainable activity and either a crash – like in 2000 and 2008 – or highly subpar performance at the very least, it tends to lead to lighter retail activity.

The observed conservative shift in 2024 – four years after the bump – highlights that retail trader behavior will adapt to changing economic environments.

Ultimately, the continued growth and evolving preferences of retail investors will remain key in understanding the future dynamics of the US financial markets.

Why Is This Information Important?

Institutional traders and market analysts monitor the percentage of retail trader activity because it helps them map out market dynamics and better understand the composition and behavior of participants.

Knowing who is active in the market – and in what proportion – influences strategy, pricing, and risk management.

Retail traders often behave differently than institutional players. Their motivations can range from long-term investing to speculative trading driven by emotion, trends, and/or social media influence.

Retail vs. Institutional Behavior

For example, a common behavioral bias is that when something is up, it becomes more exciting and they want more. If something is down, it’s “bad” and they want out.

This creates momentum-driven dynamics among this market contingent.

This momentum-driven behavior among retail traders contrasts with institutional investors like pension funds.

Pension funds typically follow disciplined asset allocation strategies, rebalancing their portfolios to maintain target weightings.

When a particular asset class performs well and becomes overweight, they often trim those holdings. Conversely, if an asset underperforms and falls below its allocation target, they may increase exposure.

This results in a more counter-cyclical approach – buying low and selling high – compared to retail investors who often chase performance, buying into strength and selling into weakness.

These contrasting behaviors influence market flow and can impact asset prices during periods of volatility or trend reversals.

When retail participation spikes, it can create short-term volatility, unusual price movements, and divergence from fundamental valuations – as seen during the meme stock surges.

For institutional traders, identifying these shifts can be used for adapting algorithms, managing exposure, and identifying trade opportunities.

Volume alone isn’t enough. Institutions want to know who is behind the trades.

A 1-million-share spike caused by hedge funds has different implications than the same spike driven by thousands of retail investors chasing momentum.

Retail activity can signal increased risk appetite, especially when concentrated in options or low-priced equities.

Conversely, declining retail engagement may indicate broader market fatigue or risk aversion.

Understanding the percentage of retail involvement also allows institutions to assess the sustainability of a trend.

High retail volume in a rally might suggest fragility, while institutional accumulation could imply long-term confidence.

By mapping out the scale, timing, and nature of retail flows, institutional players can improve execution strategies, anticipate volatility, and respond more intelligently to shifts in sentiment.

In short, tracking retail trader activity isn’t just about curiosity – it’s about deciphering the psychological/behavioral and structural pulse of the market.

Related: Agent-Based Modeling

Conclusion

The percentage of US stock market activity attributed to retail investors has significantly increased in recent years, particularly since 2020.

While estimates vary depending on the source and methodology, current data suggests that retail investors account for a substantial portion of overall trading volume, likely ranging between 15% and 25%.

This surge in participation has been primarily driven by the accessibility and affordability of online brokerage platforms and the advent of commission-free trading.

Individual investors have become a growing force in the US stock market, influencing trading volumes, market trends, and the performance of individual stocks.

Their increasing presence is evident across major exchanges, particularly in areas like options trading and even after-hours activity (which traditionally was dominated by institutional investors).

The trends observed in retail investor behavior, including the growing participation of younger generations, the interest in ETFs and thematic investing, and the evolving risk appetite, indicate a dynamic and increasingly important segment of the market.

As technology evolves and the accessibility of financial markets expands, the influence of retail investors is likely to remain a significant factor in shaping the future of the US stock market.