What is the Difference Between Institutional Traders and Retail Traders?

To understand the difference between us and them, let's look at the Difference Between Institutional Traders and Retail Traders.

AtoZ Markets – There are two types of investors in the financial stock markets:  retail investors and institutional investors.  The differences between the two investors not only the size of the trades they make but also the types of companies and financial instruments in which they invest their monies.

Difference Between Institutional Traders and Retail Traders

There are many key differences between the two trading groups which rely on some factors of trades each could participate in, the costs per trade, and the level of information and analysis each received.


Retail investors are individual’s investor who can buy and sell securities for personal benefit and account rather than for an organization. But the institutional investor is an investor, such as a bank, insurance company, retirement fund, hedge fund, or mutual fund, that is financially sophisticated and makes large investments, often held in very large portfolios of investments.

Numbers of shares

The majority of retail investors prefer to buy shares in the lot. But in the case of institutional traders who engage in block trades, which is an order to buy or sell 10,000 or more.

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Size of trades invested and technical equipment

The difference is in a size of trades invested and technical equipment. Institutional traders can invest in different securities than retail. They have more options. They can negotiate for marketing price with brokers, retail traders usually cannot. Institutional traders can impact a price of a security.

Impact on Security Price

The number of traded shares of Retail traders is too few to impact the price of the security as compare to institutional traders. It Can greatly impact share price of a security. Institutional traders may split the trade among various brokers or over time in order to not make a material impact.

Capacity of the investor

Small capacity stocks can have lower price points that attract retail investors who are able to buy many different securities in an adequate number of shares to achieve a diversified collection. Whereas the larger the institutional fund, the higher the market capacity the traders tends to own. It is more difficult to put a lot of cash to work in smaller cap stocks because they may not want to be majority owners or decrease the liquidity to the point there may be no one to take the other side of the trade.

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