Retail Investors Flashcards
(9 cards)
Who are retail investors?
Individuals trading securities for personal accounts, not on behalf of institutions or businesses.
How do retail investors contribute to capital markets?
By buying stocks, bonds, and funds, they provide capital that helps companies grow and governments finance projects.
How do retail investors impact market liquidity?
Their trading adds volume, improves liquidity, and supports the functioning of smaller-cap markets.
What drives retail investor behavior in the short term?
Sentiment, news, trends, social media influence, and emotions like fear or FOMO.
How do retail investors affect price discovery?
They contribute to pricing—especially in niche or less-followed assets—by responding to new information and market trends.
How has technology influenced retail investing?
Apps, zero-fee trading, and fractional shares have made markets more accessible and increased participation.
What investment styles do retail investors use?
A mix of long-term passive investing (e.g., ETFs) and short-term trading (e.g., day/swing trading).
How do analysts use retail investor activity?
As a sentiment indicator—surges may signal bubbles; low interest can imply fear or undervaluation.
What role do retail investors play in financial democratization?
They expand market access, promote financial literacy, and enable wealth-building beyond institutions.
