Retail trading volume in 2025 reaches 5.4 trillion! Overall returns surpass QQQ and SPY

According to independent market research firm Vanda Data, the total trading volume of retail investors in the U.S. stock and ETF markets is projected to reach $5.4 trillion in 2025, an increase of approximately 47% year-over-year, marking the highest record since 2014. Data also shows that retail investors’ overall portfolio performance has outpaced the major mainstream index ETFs, SPY and QQQ, which track the S&P 500 and Nasdaq 100 indices respectively.

Retail Trading Volume Hits a Decade High: Analysis of Driving Factors

A JPMorgan report indicates that individual investors’ capital inflows increased by about 50% from 2023 to early 2025, with January 2025’s monthly trading volume setting a new all-time high. Charles Schwab’s Chief Trading Strategist Joe Mazzola noted that retail market behavior and analytical capabilities have significantly improved, making the “dumb money” definition no longer applicable in today’s market environment.

Four Structural Factors Driving Increased Retail Participation

Proliferation of Zero-Commission Platforms: Apps like Robinhood eliminate entry barriers, attracting a large influx of new investors.

Mature Social Media Ecosystem: Platforms such as Reddit and X accelerate the horizontal flow of investment information and strategies.

Extended COVID-19 Effects: Self-directed investing habits formed during lockdowns continue to solidify in the post-pandemic era.

Shift in Asset Allocation Among Younger Generations: JPMorgan points out that some funds are coming from young investors who cannot afford home purchases, reallocating their assets into the stock market.

Retail Contrarian Operations During Tariff Events

In April 2025, the Trump administration announced a comprehensive tariff policy, causing the S&P 500 to drop over 10% in two days, the largest decline since 2020. Vanda data shows that retail investors net bought over $5 billion worth of stocks during these two days, exhibiting typical contrarian behavior. In October of the same year, a new round of tariff threats triggered a 2.7% single-day decline, with retail investors again recording one of the largest single-day net buy volumes of the year.

Interactive Brokers’ Chief Strategist Steve Sosnick stated, “When enough retail investors gather, their market influence cannot be ignored.”

Rise in Options Trading Ratio: Evolving Risk Structures

Vanda data indicates that in 2025, retail options trading volume reached approximately $650 billion, continuing to grow since 2019. Because options contracts have expiration dates, small fluctuations in stock prices can cause significant swings in contract values, making the risk substantially higher than direct stock holdings. Sosnick warns that some retail investors’ buy-the-dip strategies have become mechanized, and their risk assessment capabilities may not have kept pace with trading frequency.

Frequently Asked Questions

What is QQQ, and why is it used as a benchmark for retail performance?

QQQ (Invesco QQQ Trust) is an ETF tracking the Nasdaq 100 index, comprising large tech stocks like Apple, Microsoft, Nvidia, and others. It is one of the most traded ETFs in the U.S. and is often used as a market benchmark for the overall performance of technology assets.

Are retail investors truly outperforming QQQ and SPY overall?

According to Vanda’s 2025 data, retail portfolios’ overall returns have surpassed the performance of SPY and QQQ during the same period. This is an average statistic; individual results vary significantly, especially among high-leverage options traders, whose actual performance distribution is highly dispersed.

What are the main risks of retail participation in options trading?

Options contracts have clear expiration dates; if the market moves contrary to expectations, the contract value can drop to zero, resulting in total loss. The bid-ask spreads for low-liquidity options are large, and frequent trading incurs hidden costs that should not be overlooked.