Institutional and retail trader

  • Jun 09 2021
  • by
  • Analyst AZA
Institutional and retail trader

What is meant by the institutional trader and retail trader

Trading is one of the activities carried out in the money or stock market. This activity is more than just a process of buying and selling goods or services. The main purpose of holding this economic activity is to conduct buying and selling activities in a short period and get a profit value from the results of the buying and selling process.

Trading has become a trading activity carried out by millennials to make profits and make it a promising income field. By running trading, we can have the opportunity to earn money that can be used to meet the needs of daily life. So, if we can reach this level it can be called trading for a living. Not even infrequently because it is very reliable in this trading business, a person or even an institution can get the title of financial freedom (financial freedom). Therefore, knowledge and understanding of trading both in the stock market, forex, options, and others need to be studied well, especially in understanding general terms in it, such as the understanding of institutional traders and retail traders.

In the world of trading, we know a term or a designation, namely «TRADER» for traders or market participants. Well, traders are divided into two, namely retail traders and institutional traders. The question is what is meant by retail traders and institutional traders and whether the two have significant differences.

Retail Traders

Retail Trader is defined as the mention and naming of individual/individual trade actors both to name investors, buyers (buyers), and sellers (Sellers) who are involved and actively contribute to the Forex market, stock market, and commodity market by conducting transactions both buy and sell orders. Sell orders use the trading platform service mechanism provided by trading providers such as brokers or securities companies to generate profits/profits within the targeted period.

Referring to the meaning of the word, the term Retail Trader is also referred to as a loose change trader or small change trader because in general, they use mediocre capital or use capital whose value and the amount is not too significant which comes from personal capital.

Individual Traders who participate directly in the forex market are the largest group that supports the development and sustainability of online currency trading activities where their trading activities can be carried out independently, freely anytime, and anywhere either from home or elsewhere from there is an internet signal that supports, and is not bound by the rules of formality like someone who works in an office.

Examples of retail traders are individual traders, novice traders, seasoned traders, as well as professional traders, and individual investors who practice buying and selling commodities on their behalf.

In general, the following features and characteristics of retail traders that distinguish them from institutional traders include: The term Retail Trader refers to individual traders who are actively involved in the Forex market, stock market, and other commodity markets.

A Called a retail trader because the mechanism supports trading transaction activities using a personal account. They have a called retail traders because they use small changes or their value is still in the small or insignificant category. They are not on behalf of an institution or institution or are part of a particular business entity, Most retail traders make Forex trading and stock trading a side or part-time profession, although some make it their main profession. There are many retail traders involved in trading forex, stocks, and commodities, but the volume of transactions is very small

The role of retail traders in supporting trading activities cannot move and influence the market because their capital is small. Retail traders can only trade in general or certain securities. Retail traders do not have offices.

The general explanation of what is meant by an Institutional trader.

Institutional Trader

Institutional Trader is defined as a term to refer to commodity traders, especially Forex commodities and stock commodities as well as other commodities that are officially offered by trade providers such as brokers or securities companies where these traders use and are on behalf of, investment institutions, financial institutions, banking institutions. , insurance institutions and other business entities by using large capital and can influence and move prices in the market directly.

Direct examples to refer to traders who fall into the category of institutional traders are Hedge funds, Global Investment Banks, insurance and investment companies, speculators, market makers, liquidity providers, big traders, big players, and so on.

The following are the characteristics and characteristics of institutional traders that distinguish them from retail traders, including They are called institutional traders because, in practice, trading transactions are carried out using institutional / company accounts.

Institutional traders use capital and trading volume on a large and significant scale to be able to move prices and influence financial markets. The number of institutional traders, especially in Forex trading activities is far less than retail traders but has a very calculated role through the influence of the capital they have.

Institutional Traders open transaction orders using an automated trading system to support speed and minimize transaction errors. Institutional traders have access to a wider scope because they can carry out transaction activities in certain securities that are not available to the public.

Institutional traders have a flag and legality as a business entity that also employs professional traders and market analysts to support the goal of success in generating profits.

Institutional traders have official operational offices in carrying out their operational activities. that's the meaning of institutional and retail traders. As traders, we must increase our knowledge in this area. Learning the terms in this field is quite important.

Don't be lazy to learn, learn to increase knowledge.

Well, traders are divided into two, namely retail traders and institutional traders. The question is what is meant by retail traders and institutional traders and whether the two have significant differences.


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