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A retail investor is someone investing his own money.

by gnaritas 11y ago

kasey_junk 11y ago
In that case nearly every trader in the profession is a retail investor.
- gnaritas 11y ago
  That's true; you're a professional when you're investing other people's money. Investing your own money requires no licensing and regulation, when a professional starts to only trade his own money, he becomes a retail investor.
  - kasey_junk 11y ago
    I don't know anyone who uses that definition. Typically a "retail investor" is thought of as someone who uses a retail broker. That is, as opposed to using an IBank's trading desk, an internal trading platform, bloomberg, etc.
    - kgwgk 11y ago
      I cannot comment on what definition does the people that you know use, but I would say gnaritas' definition is more common than yours: http://lexicon.ft.com/Term?term=retail-investor http://lexicon.ft.com/Term?term=retail-investor EDIT: This is the definition used by the FINRA (Financial Industry Regulatory Authority): “Retail investor” means any person other than an institutional investor, regardless of whether the person has an account with a member. “Institutional investor” includes a bank, savings and loan association, insurance company, registered investment company, SEC or state registered investment adviser, natural person or entity with total assets of at least $50M, government entity, certain employee benefit plans with at least 100 participants (but not any participant of such plans), FINRA members and their registered persons, and any person acting solely on behalf of an institutional investor.
      - kasey_junk 11y ago
        By gnaritas definition the entirety of the proprietary trading industry would be considered retail investors, and that quite simply is ludicrous. At the end of the day these terms largely are undefined and used loosely. Is a day trader with a TT terminal in their home a "retail investor"? If so, some of the biggest movers in options markets in the world are "retail investors". The needs of that person vs someone who trades a couple of times a month via Robinhood are clearly much different.
        kgwgk 11y ago
        You seem to be also using a non-standard definition of proprietary trading (unless you think "their own money" and "their firm's money" are synonymous). http://lexicon.ft.com/Term?term=proprietary-trading http://lexicon.ft.com/Term?term=proprietary-trading I don't see why an individual day trader (even if he has a TT terminal, whatever that might be, at home) wouldn't be considered a "retail investor".
        kasey_junk 11y ago
        Many (maybe most?) proprietary trading firms are 1 or 2 person affairs where the difference between "their" money and "their firms" money is a piece of paper from Delaware. Again, these terms are loosely defined in the industry and the only reason it is important is because of the behavioral expectations. If you trade all day, whether with your own money or someone else's, on professional trading platforms (which TT or trading technologies is a very commonly used example) you should be held to different standards than someone who occasionally buys and sells shares via etrade. It is your job at that point to understand precisely how stop loss orders work and no one should give you sympathy when you do your job poorly. If we aren't going to use "retail investor" to distinguish between those 2 use cases thats fine, but we need a new terminology in that case.
        gnaritas 11y ago
        Retail doesn't mean amateur, it means not institutional, not managing money for others. I think the term you're looking for is mom and pop or amateur. Many pro's are retail investors, as are at home day traders or anyone else working with only their own capital; the tools and brokers you use are completely irrelevant to the term. My use of the term retail is standard as a cursory Google search will easily show. If you only invest your own money, you're a retail investor. Google's own definition: "A retail investor is an individual who purchases securities for his or her own personal account rather than for an organization. Retail investors typically trade in much smaller amounts than institutional investors such as mutual funds, pensions, or university endowments."

A retail investor is someone investing his own money.

kasey_junk 11y ago

In that case nearly every trader in the profession is a retail investor.

gnaritas 11y ago
That's true; you're a professional when you're investing other people's money. Investing your own money requires no licensing and regulation, when a professional starts to only trade his own money, he becomes a retail investor.
- kasey_junk 11y ago
  I don't know anyone who uses that definition. Typically a "retail investor" is thought of as someone who uses a retail broker. That is, as opposed to using an IBank's trading desk, an internal trading platform, bloomberg, etc.
  - kgwgk 11y ago
    I cannot comment on what definition does the people that you know use, but I would say gnaritas' definition is more common than yours: http://lexicon.ft.com/Term?term=retail-investor http://lexicon.ft.com/Term?term=retail-investor EDIT: This is the definition used by the FINRA (Financial Industry Regulatory Authority): “Retail investor” means any person other than an institutional investor, regardless of whether the person has an account with a member. “Institutional investor” includes a bank, savings and loan association, insurance company, registered investment company, SEC or state registered investment adviser, natural person or entity with total assets of at least $50M, government entity, certain employee benefit plans with at least 100 participants (but not any participant of such plans), FINRA members and their registered persons, and any person acting solely on behalf of an institutional investor.
    - kasey_junk 11y ago
      By gnaritas definition the entirety of the proprietary trading industry would be considered retail investors, and that quite simply is ludicrous. At the end of the day these terms largely are undefined and used loosely. Is a day trader with a TT terminal in their home a "retail investor"? If so, some of the biggest movers in options markets in the world are "retail investors". The needs of that person vs someone who trades a couple of times a month via Robinhood are clearly much different.
      - kgwgk 11y ago
        You seem to be also using a non-standard definition of proprietary trading (unless you think "their own money" and "their firm's money" are synonymous). http://lexicon.ft.com/Term?term=proprietary-trading http://lexicon.ft.com/Term?term=proprietary-trading I don't see why an individual day trader (even if he has a TT terminal, whatever that might be, at home) wouldn't be considered a "retail investor".
        kasey_junk 11y ago
        Many (maybe most?) proprietary trading firms are 1 or 2 person affairs where the difference between "their" money and "their firms" money is a piece of paper from Delaware. Again, these terms are loosely defined in the industry and the only reason it is important is because of the behavioral expectations. If you trade all day, whether with your own money or someone else's, on professional trading platforms (which TT or trading technologies is a very commonly used example) you should be held to different standards than someone who occasionally buys and sells shares via etrade. It is your job at that point to understand precisely how stop loss orders work and no one should give you sympathy when you do your job poorly. If we aren't going to use "retail investor" to distinguish between those 2 use cases thats fine, but we need a new terminology in that case.
        gnaritas 11y ago
        Retail doesn't mean amateur, it means not institutional, not managing money for others. I think the term you're looking for is mom and pop or amateur. Many pro's are retail investors, as are at home day traders or anyone else working with only their own capital; the tools and brokers you use are completely irrelevant to the term. My use of the term retail is standard as a cursory Google search will easily show. If you only invest your own money, you're a retail investor. Google's own definition: "A retail investor is an individual who purchases securities for his or her own personal account rather than for an organization. Retail investors typically trade in much smaller amounts than institutional investors such as mutual funds, pensions, or university endowments."