Trading Articles

What It Means to be a Retail Trader

If you’ve been trading for any amount of time then inevitably you will have heard the term “retail trader”.

A retail trader is anyone who trades their own account and does not work for an invest bank, trade for an insurance company, work for a broker or work on the floor of the exchange. You know, the little guys. Guys like you and me who are probably described by the following:

  • You have an account at an online brokerage.
  • You trade in your spare time.
  • You have another job that is your real career. And…
  • Your trading knowledge comes from books, seminars or what you picked up on your own.

It’s been my experience that most traders associate the term “retail trader” with the losers in the market.  The market participants who do the wrong thing at the wrong time. The guys and gals who buy at the top and sell at the bottom. Trade undercapitalized.  Trade hunches, news, tips and emotions.

I hate to say it, but, for the most part, they’re right. Because retail traders do lose — a lot. Apparently 90% of them lose. In the first year of trading. They lose everything and they quit trading for good. But why?

A number of reasons…

  • Lack of trading education
  • Lack of money
  • Lack of commitment
  • Lack of understanding
  • Psychology
  • Greed & Fear
  • Desperation

In an attempt to shed some light on this and hopefully give us retail traders a fighting chance, let’s look at these factors one by one:

Lack of Education

Be honest, you bought one book: The Idiots Guide to Trading — and you were ready to go. They made trading look so simple. Pull up a chart, plot a couple moving averages and presto – you’re a trader.

Unfortunately, it didn’t really work out so well — did it? One way or another you will have to pay for an education – either to the market or someone who knows the market. I say go for a little of both.

I don’t think this will really help…

I’m not saying this to be a jerk. I was once just like you. I thought it was going to be a cake walk. It was not a cake walk. It was more like a mind field walk. But don’t worry, you WILL get better.

Lack of Money

Irregardless of what the scammers tell you — you will not turn $1,000 into $1,000,000.00 in a month, or even a year. In the market you truly do need money to make money. So start by saving some up.

You can paper trade while you’re saving.

Lack of Commitment

You give it your best shot. You put on three trades. They don’t work out. You quit trading for good.

That’s life though, right?

Not everyone is here to go the distance. If you want to win in the markets – know this – it will require more work than most are willing to do.

Lack of Understanding

Trading the markets is not about calling tops and bottoms and they sure as heck aren’t about stock tips and what’s hot. Trading well is about self management, trade management and money management. Some traders never learn this.


How you manage your emotions, your discipline, how you talk to your self, your childhood, your self talk — these things all come into play when you have money at risk on an uncertain outcome.

Please read this!

Greed & Fear

You will learn a lot about greed and fear when you are trading.

Get too greedy and you will blow up your account. Get too fearful and you will not have the courage to pull the trigger. You will need to put both in check if you hope to succeed at trading.


You cannot learn how to trade or even make money when you need the money you are trading with to pay the rent. Period. Always pay your rent first.

In Conclusion

That’s right, Retail Traders there a quite a few things stacked against you – not to mention the cost of commissions – but do not fear. There have been several really successful Retail Traders over the years who prove with certainty that trading can be learned and that the part time Retail Trader can succeed in the market. Will you be one of them?

Well, that’s entirely up to you.

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