Robinhood is seeing retail investor habits change dramatically as stock trading cools

Retail investors are changing the way they trade.

While overall retail volumes are declining , as Goldman Sachs strategist Ben Snider wrote in a recent note, money is shifting away from traditional equities.

Instead, more investors are pouring their funds into options, leveraged ETFs, and prediction markets. Robinhood's ( HOOD ) latest earnings offer a window into the shift .

The online brokerage reported weaker-than-expected profits earlier this week as declining interest income and rising expenses weighed on the company. But it also drew record trading activity in stocks, options, and prediction markets.

Robinhood said revenue from prediction markets increased more than 500% from this time last year, up to $173 million. Customers traded a record 16.4 billion contracts during the past quarter.

Bearish sentiment has ticked up, according to a survey by Morgan Stanley Wealth Management published earlier this week. The firm found that 42% of investors are bearish this quarter, marking a 4 percentage point increase from Q3, as persistent inflation concerns, midterm election uncertainty, and rate-hike expectations prompt greater caution.

Goldman's Snider found that retail volumes have declined by about 20% since the middle of the summer and more than 40% since the end of last year. And while weaker consumer sentiment and higher energy prices partially explain the pullback, there's been a notable shift in investment vehicles.

Trading activity in leveraged ETFs has been roughly double that of ETFs tracking the same indexes without leverage, Snider's research shows. Yet another sign of appetite for riskier propositions as investors seem to be chasing the action.

And retreating from the more boring corners: Crypto's slump is also part of the changing retail investor story.

Robinhood reported that crypto trading revenue plunged 55% to $120 million amid a sharp drop-off in activity, which has broadly tracked bitcoin's 2026 fortunes.