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  Category: Articles » Finance » Investing » Article

We Should All be Greatful to Day Traders

By Amy Goodmann

Day traders play an essential and often uppreciated role in our economy. And do not most things and events in life come back to the subject of "money". Day traders allow the stock market to put a price on the companies that are a constant, vital part of our lives. We know these companies. As they touch our lives in many ways. They build our homes, produce our food, make our clothing and build our cars. They broadcast our TV show we watch and pipe the internet as well as telephone and cable service into our homes. They provide jobs for our friends and families. As an integral part of our economic cycle, these are companies that need capital to develop the products that will improve that will improve the quality of our lives in the years to come.

The stock market allows day traders to put a price on these companies every second of the trading day. By actively trading, day traders provide the liquidity that is the cornerstone of our markets. Without liquidity, companies would not be able to raise the money they need to produce the goods and provide the services that we demand. Without liquidity, investors would not be able to commit capital. It is this capital that allows these companies to grow and prosper in our economy. And it is the day trader who plays a pivotal role in creating the markets that allow our economy to flourish.

Day traders add immense depth and liquidity to the stock markets. Liquidity enables any individual, institution or financial institution to rapidly sell its stock for fair value and that is a direct consequence of the large relative numbers of day traders providing active financial markets. Liquidity does not just mean a rapid turnover: it means a rapid turnover at fair value. It could be said that anyone could sell a Rolex watch on the street for $ 25 dollars, but this would not constitute or represent a fair price for the product and therefore could not be said to represent fair and present value. Thus to blow out product at prices below fair and reasonable value does not constitute true and trustworthy liquidity. Other products of wealth such as Real Estate or large expensive boasts may sits for many expensive years before buyers appear on the market that are willing to pay fair value for the product to be liquidated into cash... On the other hand, the stock market allows trader to place a value on capital investments and more importantly affords investors and traders the opportunity to enter or exit their equity positions efficiently in an effective manner. The economic functions of the markets, coupled with unparalleled liquidity and a myriad of constantly arising new opportunities, communication tools and ongoing technological advances make the stock market the ultimate way to speculate and as well provide a value function of the value of assets as well as a quick means of liquidation and accumulation of vital capital.
About the Author
Amy Goodmann
Senior Financial Analyst
Forex Forex Forex Forex

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