Retail investors consolidate control of daily U.S. trading

Retail investors have never had this much power. Five years after GameStop took off and stunned the market, regular traders are still here and louder than ever. They’ve pushed their way into the system, and they’re not leaving. They’ve become part of how the market works now.

Tom Lee, who runs research at Fundstrat, said he used to treat retail traders as signals. His ETF now manages over $4 billion.

“When they were buying dips, the bull market was healthy,” Tom said. “From 2009 to 2020, institutions acted like retail didn’t exist. That changed completely after 2020. Retail investors are difference-makers. They can move markets with size and conviction.”

Retail trading keeps rising after Covid

One of the retail traders on Reddit is Nick Wyatt, who during Covid, used extra time and saved cash to study investing. At first, he tried day-trading. Then he switched to a long-term plan with a Roth IRA. “It’s the best decision I ever made,” Nick said. “Compounding interest is the greatest thing since sliced bread. You can’t beat it.” He even helped his fiancée get started. Their profits helped with a house down payment.

Steve Quirk, who runs brokerage at Robinhood, said he expected it to fade. “A lot of people assumed that once Covid cleared and everyone went back to their daily lives, retail participation would fall off,” Steve said. “What surprised me a little is just how strong it’s been.”

Jeff Shen at BlackRock said retail now makes up nearly 20% of daily trading in U.S. equities. It was only low single digits before. On heavy trading days, it can reach 40%. And on the options side, it can jump to 50%. Shen added, “There is certainly a social aspect of it that is quite foreign to a classic hedge fund where there’s a lot of independence. The social aspect makes this type of flow very correlated.”

The meme-stock craze made this all bigger. Reddit forums like WallStreetBets helped ideas spread fast. Keith Gill, known as Roaring Kitty, became a symbol. It wasn’t organized in a formal way, but the crowd acted together. That GameStop moment became so big it even got turned into the movie Dumb Money in 2023.

But it didn’t end there. In 2025, JPMorgan reported that retail inflows hit a new record. They were up 60% from the year before and 17% above the peak in 2021. Devin Ryan at Citizens JMP said, “This is a new retail investor that is much more informed, much more engaged, has many more tools. It’s not just democratization of access to the markets, but also of information.”

Hedge funds adapt to the retail surge

The drop in trading costs helped too. Commissions used to be close to $100. By 2020, firms let people trade tiny pieces of stocks. You could buy Apple with $5 instead of needing $5,000. No minimums. Just a phone and some cash.

The big funds had to adjust. Some short sellers got crushed. Now, shorting popular stocks is risky. Many hedge funds have pulled back from heavy short bets. They’re diversifying and watching retail sentiment closely.

JJ Kinahan from Cboe Global Markets said, “It’s just so great to see that dumb money moniker go away, and then to get respect from the institutions. Professionals learned a lesson from the tenaciousness of the retail investors who believe in companies and continue to buy them.”

Ivan Ćosović, who runs Breakout Point, said, “To many professional investors, retail traders have become that annoying TV-series villain who never quite gets written out. Now, five years in, it’s basically the fifth season of the show, and somehow they’re still in the cast.”

Retail traders also kept buying during rough patches. During the tariff-related selloff last April, they bought hard. They also jumped into SPDR Gold Shares. Their timing worked. Returns were solid.

In 2026, they’ve locked onto energy stocks after the U.S. hit Venezuela. And silver. It just passed $100 per ounce for the first time. Steve said, “They bailed out the market during Covid, and they bailed it out again during the tariffs, they were aggressive buyers. People underestimate how savvy retail investors are.”

Younger traders, crypto hours, and the next $120 trillion

Some retail traders are going after riskier plays like leveraged funds or meme stocks like Opendoor and Kohl’s. But Douglas Yones at Direxion said they’re not being reckless. “The markets are playing into the hands of retail. The volatility has been incredibly good for end investors.” His firm’s research shows they’re keeping most of their money in safer stuff.

Tom said retail has more money now than institutional players. Around 76% of U.S. household wealth is with people over 60. They’ve been quiet in markets, but that’s changing as they pass wealth down.

Tom said, “Retail participation could get much, much bigger. That’s four times the size of the US economy. It’s more wealth than the entire net worth of China.” His estimate? $120 trillion could move to millennials and Gen Z in the next two decades.

Brokerages see what’s coming. They’re building tools for the younger crowd. That means 24/7 trading, crypto, prediction markets, even private offerings that used to be off-limits to small traders.

Data backs it up. JPMorgan found 37% of 25-year-olds in 2024 moved real money from checking accounts into investments. That’s a huge jump from the 6% who did that in 2015.

Sharpen your strategy with mentorship + daily ideas - 30 days free access to our trading program