They provide liquidity and hope to investors, whilst understanding opportunity and RvR on a level you have yet to comes to grips with.
BSX trading today was a great example.
Someone had the opportunity to buy 100k shares this morning at 5.7, but didn't. SW (an assumption) buys up the big sell order at 5.8. Someone thinks "BSX is going to go for a run and gets FOMO" I take out the 6 line to support the FOMO urge. Someone's FOMO really kicks in as the bots join the party to push through some of the remaining low volume sell side. Someone puts a buy order in at 6.4 hoping for a pullback. I provide someone the opportunity to buy shares at 6.4 that they could have bought at 5.7 had they had any real conviction in the stock. End of day, the buy side evaporates yet again. Who bought the 100k at 6.4? Maybe another day trader who doesn't have intimate knowledge of the stock and just saw the big intraday volume and SP % movement, or maybe an investor thinking they'll average down a little in the hope that this is "The Run" that gets them back to breakeven on a beaten up stock. It matters not to me who the someone was.
This is what a day trader sees.
An opportunity followed by 14 minutes of risk for $400 profit.
The benefit of day/swing trading is that your money is always working for you, rather than having extended periods of it being tied up doing nothing or going backwards. And granted, most don't have the opportunity, knowledge or time to do it, but if that's the case then learn to live with it.
You don't need to play the game, but you need to understand and be able to spot the game. No stock has ever been a buy and hold for eternity, aim for 50-80% of a move, be happy with a profit and move on. Learn as much as possible about the stock if you do enter, both the good and the bad, and do it with an unbiased mind. And most importantly, admit to yourself when your buy theory was wrong, accept it, and look for the next opportunity or appropriate re-entry.
I look to day trade an entry point that leads to a swing trade. This is what the end game looks like.
BSX Price at posting:
7.0¢ Sentiment: None Disclosure: Not Held
