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A retail trader is an individual trader who trades with money from personal wealth, rather than on behalf of an institution.

A retail trader is someone who trades their own money, but not for a living. They buy or sell securities for personal accounts (PA).

A professional trader is someone who gets paid to trade other people’s money and usually for an institution.

Institutional traders buy and sell securities for accounts they manage for a group or institution.

Pension funds, mutual fund families, insurance companies, and exchange-traded funds (ETFs) are common institutional traders.

Institutional traders have the ability to invest in securities that generally are not available to retail traders, such as forwards and swaps.

The complex nature and types of transactions typically discourage or prohibit individual traders.

By definition, the SEC considers retail traders unsophisticated investors, who are afforded certain protections and barred from making certain risky, complex investments.