I'm not an advocate for day trading, I'm primarily a value investor. What I'm advocating for here is some very basic risk management, risk limiting, for an average investor swimming in a bubble (with some existing gains). If you're an average investor just now looking to enter the market, my advice would be to only do that via on-going buying of an index fund or equivalent, something you plan to continue in good times and bad for example.

That's not to say there are no buys remaining in this market that will yet produce huge returns, rather, I personally wouldn't provide advice on specific stocks on the premise of seeking large returns here (ie which stocks will be the next SQ or SHOP; what's going up 500% in the next six months). Square under $40 was an easy buy, it had a large margin of safety in its valuation; at $166, six months later, I consider it dangerous and wouldn't advise anyone to buy it as a new position (that's what 300%+ in six months will do).

When the parent asked how an average investor should take advantage of the situation, I took that to mean: how should an average investor that is already in this market manage the context (rather than it meaning to enter the market for the first time here and now). I'm looking at this market from a particular angle: I'd say an average investor, already in the market, should take advantage of the situation by looking to exit some or all of their gains (take advantage of the market to exit value; which is what eg Tesla is doing when diluting now, or SV companies are doing rushing to the IPO exits); that's merely my opinion though.

I'll give you an example of what I'm talking about.

Say you bought Square (SQ) between $40 and $80 during/after the March plunge (or even if you caught it in June and are already up 50-60%). Not an abnormal scenario, as many people will be sitting on large gains from the past five or six months.

So one of two scenarios related to what I've said (simplified a bit for brevity):

1) You're sitting on a large gain now, maybe 100%-300% in a mere five to six months. Take your principle off the table only, optionally with a bit of profit as well, and let the rest ride if you want to continue to participate in this market mania to see how far it can go. Or sell it all, if you're fully comfortable with your gains, and bag the full profit here. Either scenario is quite reasonable depending on the person doing the investing. It will heavily depend on your personality type, it's important to understand yourself, your impulses, your weaknesses & strengths, how you react to things. Some people might want to leave more of the profit in the market, some might feel better pulling it all. What I'd suggest at this point for an average investor, given this scenario, is removing the principle at a minimum.

That's not day trading. I'm not suggesting jumping in and out of SQ, trading it constantly trying to profit on small swings. The scenario is that you established a specific position, eg at $40, $80 or $100, and now you're looking at how to either exit or otherwise reduce risk in a reasonable manner. In my view, most of what is left to take advantage of here, is the selling opportunity being presented.

2) You noticed your position was up a lot in a short amount of time, eg it went from $40 to $60, or $60 to $100. Rather than debating when exactly to sell all or a big chunk of it, you sell gradually as it climbs, until either you're entirely out of it or you've extracted your principle (then decide on strategy for the profit remaining). It's of course nothing more than averaging across sales, some people feel more comfortable doing that than selling all at once, especially if they think a stock might keep moving higher yet and they want to try to capture some of that remaining upside.