Individual Investors Impact Markets

Until recently, the majority of trades on stock markets were performed by institutional investors (such as pension funds and mutual funds), hedge funds, central banks and sophisticated high-net-worth individuals (HNWIs), sometimes collectively referred to as “smart money.” However, starting in 2021 and prompted to some extent by the large number of people staying at home during the COVID pandemic, day traders and other individual investors filled their days with online trades which greatly impacted the markets. That trend has continued post-COVID in a very meaningful way.

Traditional trends in market behavior shifted as individual investors bought and sold based on personal tastes, popular trends or even whims, as opposed to extensive market analysis and the study of potential sources of risk. For example, a dramatic viral rise in purchases of shares of GameStop in January 2021 was a result of social media hype on platforms such as Reddit, X (formerly Twitter) and Discord. The shares were dubbed “meme stocks.”

Through 2025, the trend expanded, with individual investors pumping record amounts of money into stocks, cryptocurrencies and ETFs. Citadel Securities reported that these “retail trades” accounted for 22% of industry trading volume in October 2025. Billions of dollars from these investors pushed the S&P 500 through a number of selloffs, helping to create a 16% market gain for the year. Other markets saw similar gains.

Going forward, retail trading is expected to continue to be a driving force in stock markets. Companies going public are setting aside more shares in IPOs for individual investors. Brokerages are also offering opportunities for investment in private companies, an option long desired by individual investors. Online trading platforms like Robinhood have been tailored specifically to cater to non-professional, individual traders, with specialized tools and services that make it easy (and even entertaining) to trade, both from desktops and mobile devices. Such platforms offer cryptocurrencies, options, cash accounts, margin accounts and a wide variety of tools in addition to stocks and funds.

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