Retail Trading; All You Need To Know

Since the internet was created, previously inaccessible goods and services, including financial services, have become accessible. This has allowed retail traders to overcome financial obstacles and achieve financial millstones for decades now.

Retail trading has gained a significant reputation as a result of this technological breakthrough, which cannot be overstated in the global market.

What is Retail Trading?

The process of buying and selling securities through a broker-dealer company that focuses on serving individual investors is known as retail trading. In comparison to the big investment banks that serve institutional clients, these companies or individuals are often significantly smaller.

History of Retail Trading?

Retail trading can be dated back to the 90s after the introduction of forex trading platforms. This was considered a crucial technological breakthrough because financial barriers that hindered small-time investors or individual investors from trading forex were automatically removed, giving every broker unlimited rights to open and close trades themselves and to also make a profit. Interesting right? Well, before delving further into the topic, every beginner must understand what Retail Trading means.

Who Are Retail Traders?

A retail trader is an individual or small business that trades securities using its funds with the intent of making a profit. What they do is trade securities for their accounts through brokerages. Some popular and successful retail traders in the history of retail trading are;

Nicolas Darvas proved his trading skill after his fund got up to $2 million and above. He made remarkable history on the market.

George Soros is one of the richest ever known with a net worth of about $8 billion. George Soros's news became a major headline in the world after he broke the bank of England in the year 1992 after his sale of $10 billion worth of pounds, yielded him a $1 billion profit and that resulted in the Black Wednesday crisis.

Jesse Livermore popularly known as "Boy Plunger" was also another popular and successful retail trader in history. He was importantly recognized for making huge bets. Jesse made huge success throughout his carrier. However, he recorded some losses as well.

Paul Tudor Jones, Another successful retail trader whose net worth is estimated at $7.3 billion in 2022 became popular after he made $100 million from shorting stocks during the 1987 market crash. He also hit a major financial milestone after the successful prediction of the Dotcom bubble burst in 2000. Paul is the founder of Tudor Investment Corporation, one of the world's leading hedge funds.

Types of Retail Traders

There are different categories of retail traders, and each has particular objectives and techniques. They consist of;
A day Trader is a person who buys and sells securities on the same business day. From the daily price swings, they hope to generate modest profits.
Swing Trader: A swing trader keeps stock for a few days or weeks to sell them for more money than they were originally purchased for.
Position Trader: A position trader is a long-term investor who purchases stocks and keeps them for several months or perhaps several years with the hope of making a profit from the overall market trend.

Retail Strategy Every Trader needs to know

Note; As a retail trader, making a profit is the goal which is why to be successful in the trading market, there are several strategies you need to understand and apply. Some of these strategies include;

Know The Risk Involved; Retail trading like every other investment/ business has its risk which is why every trader needs to know how much risk is involved and how much risk you are willing to take before starting a trade.

Discipline: Discipline is a key quality in Business. As a retail trader, you need to purge yourself from making the wrong trading decision/ plan.

Have A Trading Plan. From your entry and exit criteria, down to your risk management strategy, a retail trader needs to document that before starting a trade.

Maintaining a Trading Diary: This will enable you to monitor your development and pinpoint your areas for growth.

Creating a Network of Support; as a retail trader, you can achieve success by finding a mentor or joining a trading community.

Choose a Trading Type and Understand the Techniques that Work for you; remember there are three main types of trader namely; day trader, swing trader, and position trader. Each of these traders has a different profit target as well as strategy.

Some Major Retail Trading Platforms

A retail platform helps retail traders access the financial markets. A retail platform can either be done through an online broker, a trading platform, or even a mobile app. Some of the world's best retail trading platforms include;

eToro; One of the top social investment networks in the world, eToro aspires to revolutionize the way people invest and improve investors' financial literacy. Retail traders using eToro, can mimic the trades of other successful traders on the platform, making this an excellent approach for them to start in the markets. On eToro, you can diversify your portfolio, discover thousands of assets, share ideas, discuss strategies, and beyond.

Webull provides very intuitive desktop and mobile apps that are ideal for intermediate and advanced traders. The fundamental and technical analysis tools available on the Webull platforms include sophisticated charting and technical indicators. On Webull's platforms, customers can trade more than 5,000 exchange-traded funds (ETFs), stocks, and more. What is most interesting about Webull is that you can register an account and test-run it without making an initial deposit.

Robinhood; is one of the best trading platforms to try out. Apart from being a commission-free online broker that allows retail traders to trade stocks, options, and ETFs, the platform also gives you access to invest at your pace.

TD Ameritrade; is a stockbroker that offers an electronic trading platform for the trade of financial assets including common stocks, preferred stocks, futures contracts, exchange-traded funds, forex, options, mutual funds, fixed-income investments, margin lending, and cash management services (source Wikipedia)

E*TRADE; is the pioneer of online trading for retail investors and is now part of Morgan Stanley, a leading global financial services firm renowned for the quality of its wealth management, investment advisory services, research, and market insights. The platform was born in the early '80s when a physicist and inventor developed a process to place a trade online for retail investors. This became the first online transaction sent to an exchange, and it paved the way for all main street investors to control their investments online, without the need for a human broker. Today, E*TRADE specializes in a first-class experience for digitally inclined investors and traders.

Meta Trader 4 & 5: MetaTrader4 (MT4) is a popular internet trading platform for automating your trading. Its straightforward user interface provides access to comprehensive technical analysis and versatile trading techniques. MetaTrader 4 and 5, generally known as MT4 and MT5, are computerised trading platforms that are popular among online retail foreign currency speculative traders. MetaQuotes Software created it and published it in 2005. Foreign exchange brokers that supply the software to their clients are licenced to use it.

TradingView is a charting software and social network used by 30 million traders and investors across the world to identify opportunities in global markets.
TradingView is a social community where traders can engage, learn, exchange ideas, and collaborate to enhance their abilities. The unique and easy method of instantaneously sharing live charts with technical analysis ideas unites traders together and is the first step toward having a comprehensive trading platform in a web browser.

The list of retail trading platforms listed is only but a few. Some other very important trading platforms include; Fidelity, Merrill, Vanguard, and many more.

Conclusion

To wrap up this edition of retail trading and all you need to know about it, you can see that it can be a very profitable trading decision to be a retail trader. However, if done wrongly, one may have losses one cannot recover from. This is why we have carefully researched and put down all the necessary information you need to either start as a beginner or as a professional who seeks to know more about retail trading.