Individual investors accounted for $5.4 trillion in trading activity in 2025 across stocks and exchange-traded funds, a 47% increase from 2024, according to research firm Vanda. The total represents the most going back to at least 2014, upending years of Wall Street dismissal of retail traders as unsophisticated “dumb money.” “I personally want to dispel the myth of retail being dumb money, because it’s not dumb money anymore,” said Joe Mazzola, head of trading and derivatives strategy at Charles Schwab.
The surge in individual investor participation reflects profound structural shifts in the markets over the past decade: zero-commission trading platforms like Robinhood, online research tools, social-media investment communities, and years of strong stock market gains have ushered millions of Americans into active trading. Individual investors now rival institutional players as a force shaping market behavior, according to Steve Sosnick, chief strategist at Interactive Brokers.
When markets drop, retail investors buy
Years of mostly strong stock market performance — the S&P 500 posted annual losses only three times since 2015 — helped draw millions into active trading. The COVID-19 lockdowns accelerated the shift, spurring a wave of young newcomers using mobile apps like Robinhood and triggering the “meme stock” frenzy that catapulted GameStop and AMC Entertainment higher.
The most striking example of retail investors’ new clout came in April 2025, when President Donald Trump announced unexpectedly severe tariffs. The announcement sent the S&P 500 into a two-day tailspin exceeding 10% — the sharpest decline since the 2020 COVID crash.
Instead of panicking, retail investors seized the opportunity. They purchased more than $5 billion in stocks over those two days, according to Vanda. “In April, it was retail investors that bought the dip,” Mazzola said. “They were the ones that were willing to step in front. They saw the opportunity.”
The pattern repeated on October 10, when retail traders again stepped in to buy after Trump threatened a “massive increase on tariffs” on China and the market dropped 2.7%.
Retail activity surged again in January 2026, hitting an all-time high on a rolling monthly basis, according to J.P. Morgan. The same month, retail traders turbocharged the price of silver to record highs by purchasing a record amount of silver exchange-traded funds, according to Vanda data.
Analysis by Charles Schwab of its retail investor clients found them net buyers in January, with Microsoft, Netflix, and Tesla among the most popular stock purchases.
The riskier bets: options and high-volatility trades
While many retail investors balance active trading with long-term portfolio building, others have taken on significantly greater risk through options trading, which accounted for about $650 billion of retail investor trading in 2025 — a volume that has been rising steadily since at least 2019.
Frank Sabia, a high school registrar from Encino, California, started dabbling in investing in 2018. Over the years, he has leveled up his knowledge through online investor chat groups and seminars like Charles Schwab’s. “I learned a lot more about options strategies and charting and everything from there,” Sabia said. “Now I’m independent. I just look for my own trades. I have my own strategy. I hunt on my own.”
Sabia said his “bread and butter” is options trading — contracts to buy or sell a stock at a specific price before a specified date. Options can be less costly upfront than buying stock, but the stakes are higher: options expire, and a small move in a stock’s price can translate into a large swing in the value of an options contract.
Noah Goodwin, a high school junior in Castaic, a Los Angeles suburb, started options trading on Robinhood Markets using his mother’s custodial account. His first trade paid off immediately: he bought $148 worth of Nvidia options on January 20, 2025, the day Nvidia shares plunged on news of AI advances by Chinese startup DeepSeek. He sold the options later that day.
“I made a $200 profit. My very first trade!” Goodwin said in an interview.
Not all his trades succeeded. In July, he thought he could capitalize on market volatility caused by tariff uncertainty, but he miscalculated. “I lost a lot of money, like probably like around $600 to $800,” he said. “So, a horrible month for me.”
The mechanical trap
Steve Sosnick warned that repeated success with buying market dips may be breeding overconfidence. “For the most part, with only some exceptions, buying the dip has tended to be a very profitable tactic for many retail investors,” he said. But he cautioned that “the risk to it is that for many of them it’s become sort of mechanical,” without full consideration of risks and rewards.
Andy Hu, a financial analyst in Los Angeles, said he has struck a balance between risky short-term trades and long-term investing. He keeps 50% of his portfolio in the SPDR S&P 500 ETF Trust, a popular fund that tracks the S&P 500. For short-term trades, he focuses on micro-cap stocks — very small publicly traded companies that can see large price swings due to thin trading volume.
The approach had his active trading account up 20% through the first 11 months of 2025. But he stopped trading in late 2025 when a pullback in big tech companies helped drag the S&P 500 to a monthly loss in December. “I haven’t made a single trade in the last two months,” Hu said.
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