Discussion paper

DP12462 Trading in style: Retail investors vs. institutions

We examine the comparative trading performance of retail investors using an exhaustive sample of trades made by all investors in a stock market. Retail investors trade systematically at better prices than institutions, especially domestic institutions. We also find evidence of retail investors having a comparative advantage when trading stocks in their preferred trading style. These findings are consistent with retail investors rationally utilizing their trading flexibility and information made available to them. Based on a population of retail trades, our findings challenge the stereotype arising from earlier studies that retail investors are noise traders.


Wolff, C (2017), ‘DP12462 Trading in style: Retail investors vs. institutions‘, CEPR Discussion Paper No. 12462. CEPR Press, Paris & London. https://cepr.org/publications/dp12462