A retail trader is an individual trader who trades with money from personal wealth, rather than on behalf of an institution.
Retail traders typically invest in stocks, bonds, options, and futures, and they have minimal to no access to IPOs. Most trades are made in round lots (100 shares), but retail traders can trade any amount of shares at a time.
The cost to make trades might be higher for retail traders if they go through a broker that charges a flat fee per trade in addition to marketing and distribution costs. The number of shares traded by retail traders usually is too few to impact the price of the security.
Unlike institutional traders, retail traders are more likely to invest in small-cap stocks because they can have lower price points, allowing them to buy many different securities in an adequate number of shares to achieve a diversified portfolio.