What Is a Piker?

A piker is a broker or investor who makes small size trades. "Piker" is a pejorative slang term used to describe simplistic individuals who are said to have limited impact on the operations of the market or a business.

An individual is most likely to be considered a piker if they make small trades or do not prepare fully for the trading day. The word itself is thought to be more offensive than a term such as “amateur." An individual who believes themself to be very knowledgeable about investing, despite evidence indicating otherwise, would be considered a piker.

Key Takeaways

  • A piker is a broker or investor who makes small size trades and it is considered to be a pejorative term.
  • The term "piker" also refers to an individual who believes they know a lot about the financial markets but in reality, have a small amount of knowledge.
  • Pikers are overly cautious and only make small trades, avoiding risk, and, therefore, only generate small profits.
  • Most individuals that would be classified as pikers work in bottom-tier financial firms.

Understanding a Piker

Professional brokers or investors may consider investors who don’t work in a formal setting as pikers. They would look down on this group as a bunch of amateurs; day traders are thrown into this pile of pikers in their minds.

This may be fueled by the idea that day traders work from home in their pajamas, waking up right before the opening bell and trading without researching securities with the same attention to detail as professionals who study markets and securities for a living. Because of this scornful attitude on the part of professional brokers and investors, calling someone a piker face-to-face is generally something that's not done.

That being said, day traders are very knowledgeable about the market as they have to make quick decisions trading throughout the day. They don't hold positions overnight so having an idea of what direction a security is moving during the day is crucial in determining whether to buy or sell positions.

Actively investing or trading requires an immense amount of knowledge about the financial markets and the securities being traded, whether you are a day trader or otherwise. Not only do traders need to be abreast of all the latest news, but they need to have an understanding of how securities and markets function. Most traders take large positions to ensure they generate large profits.

For example, if a trader bought one share of a stock and that stock increased by $2 in a day, they would've made $2, gross. Now, if a trader had purchased 3,000 shares of the same stock, they would've made $6,000 gross, a much higher number. Of course, their risk of loss is higher with a larger position.

A piker would be an individual who made the $2 profit purchasing one share; low risk and low return, and most often, without any real insight into the market or security.

Special Considerations

In another sense, the word piker is used to describe an investor who transacts in ways considered outside of the ordinary compared to normative practices by brokers. In addition to being compared to an amateur investor, "piker" may be used to describe a professional broker who submits an odd unit of trading in a deep market.

For example, a broker may place an order for $5,000 worth of a security. Another broker may consider this so insignificant as to be laughable, and would not want to waste time handling the order. However, if they are bored at the moment and decide to execute the order if only for a small commission, they'll do it; and then share a joke with their buddy about the piker.

Pikers usually work for bottom-tier firms rather than top-tier firms. Top-tier firms hire the best of the best and expect large profits and exceptional trades from the individuals they hire. A piker wouldn't fit into a firm like this, therefore, are typically found at companies that don't really have much impact in the financial world.

Origins of the Term

There are a variety of different sources indicating where the term "piker" came from. The Oxford English Dictionary provides a few meanings. One meaning is a "cautious or timid gambler who makes only small bets. A person who takes no chances." It also refers to a "poor white migrant from the Southern states of the U.S. (originally Pike County, Missouri)."

The latter has its origins in the Gold Rush, according to some sources. Travelers heading to California for the Gold Rush came from or traveled through Pike County, Missouri, becoming known as "pikers"; individuals that were frugal and did not spend their money, particularly on drinking or gambling.