Who actually trades in the market?

Course 1 left you with a picture: when you buy a share, another investor sells it to you. Time to meet that "other investor" — because the crowd on the other side of your trades is stranger and more varied than most beginners imagine.

The two big tribes

• Retail investors — individuals trading their own money through broker apps. Tens of millions of people, mostly small orders. That's you, once you start.
• Institutions — organizations trading other people's money at scale: pension funds, insurance companies, mutual funds, hedge funds, banks. Single orders can be worth millions, executed by professionals with research teams and serious technology.

Here's the number that recalibrates intuition: institutions account for the large majority of trading volume in major stock markets. Retail participation surged in 2020, after US brokers dropped commissions to zero in late 2019, but the typical share you buy still comes from — or goes to — a professional.

Why this matters for how you read markets

When a stock moves sharply on heavy volume, that's rarely thousands of individuals suddenly agreeing. More often it's institutions repositioning: a fund rebalancing, an index tracker adjusting, a pension shifting allocations. Big moves usually have big feet.

It also sets honest expectations. On the other side of your trade there may be a desk with decades of experience and models running on live data. That's not a reason for fear — in liquid markets you both get the same visible price — but it is a reason for humility about "outsmarting" the market on speed or information.

The quiet giants

The biggest pool of invested money in modern markets is surprisingly boring: index funds (Course 1, Unit 3). They don't pick stocks at all — they buy whatever the list says, in list proportions, with the trillions entrusted to them. Their steady, rule-driven flows are a background tide under everything.

In the data

A company's profile answers "who owns it" twice: once as a headline percentage held by institutions and insiders, and once as a named list of the largest holders. Apple's headline:

And its named list, all twenty holders with each one's share of the company:

Two things to know before reading the list. Each holder reports on its own filing schedule, so one row can be as of last December while its neighbour is as of March; the list is a patchwork, not a snapshot. And it stops at twenty names, so it will never add up to the headline percentage.

Try it now

1. Find institutional ownership in the headline table above — the percentage of shares held by funds and institutions. For most large companies it is well over half. For your own anchor company, open its holders in the Terminal and change the symbol there.

Open AAPL.US — holders in the EODHD Terminal

2. Now add up the percentages of all twenty named holders in the list above, and subtract that total from the percentage in step 1. The remainder is not a rounding error: the list stops at twenty, and what you have just measured is the size of the tail — hundreds or thousands of institutions too small to be listed, holding more of the company between them than several of the named giants.
3. Look at the top of that list: you'll likely recognize the giant asset managers — the "quiet giants" own a piece of nearly everything, on behalf of millions of savers (the next lesson puts names to the largest). Check the dates on the two neighbouring rows at the foot of the table before you compare their sizes; holders file on their own schedules, and the list is a patchwork rather than a snapshot.