Article in Press
This article is currently in the Just Accepted phase. The final published version may have formatting changes or additional corrections.
Abstract
The COVID-19 pandemic sparked an unprecedented surge in U.S. retail investor trading activity. This paper analyzes how that initial boom has evolved into more enduring structural changes in market participation. The document examines the technological enablers of this transformation, from commission-free trading apps and retail API access to the rise of algorithmic tools – and the social dynamics of community-driven investing on platforms like Reddit’s Wall Street Bets, and Discord. The document assesses economic impacts such as shifts in order flow and liquidity, changes in regulatory outlook (e.g., scrutiny of payment for order flow and digital engagement practices), and behavioral finance implications of this retail revolution. Leveraging data-supported insights and industry commentary, the document tracks that retail trading activity has moderated from its 2020–21 peaks, it remains significantly higher than pre-pandemic levels [1]. Retail investors have greater technological access and influence than ever, raising important considerations for market structure and investor protection. Keywords: Retail investors, algorithmic trading, social trading, payment for order flow, behavioral finance, COVID-19, market structure.
