Price Takers: Understanding Market Influence & Investor Types

A price taker is an investor that can place a buy or sell order in the market and the order does not have any impact on the market itself. This individual simply takes the price of the security that is available in the market at the time of the order. Individual investors are typically considered to be price takers.

Institutional Investors

On the other end of the scale are institutional investors. Institutional investors have large amounts of capital to trade in the market. When they place a trade of the market, it can significantly affect the price of the security that they purchased. For example, they purchase a particular stock in large quantities and then the price of the stock increases substantially because of it. 

Individual Investors

Price takers are generally individuals that have long-term investment goals in mind. This type of investing is fine for individuals the value long-term growth instead of short-term profits. If you are going to actively trade the market as a day trader, you will most likely not be able to be profitable as a price taker. Instead, you should use limit orders to get the price that you want on every transaction instead of simply taking the market price.