I’ve heard for a while now that holding long term is the only way to go and that paying short term capital gains is a deal breaker. I was having a ton of fun day trading ending 2021 but 2022’s bear market made it easy to follow the long term hold rule since I couldn’t sell at a gain anyway.
However, I’ve searched for the logic in avoiding short term capital gains taxes at all costs and I can’t figure out the math. To be clear, my state doesn’t tax me so my only tax will be 10% short term and 0% long term. My gains have been far below the first threshold. Also, I already know that I can’t exceed the day trade movements without being flagged, so by “day trading” I mean short term buying and selling without raising the actual day trade flag.
Example 1: I sell $TECS today at $5 profit then buy next week and sell again a week later at another $5 profit, what’s the big deal on paying $1 out of the $10 gained and what’s the problem on doing this all year?
Example 2: I sell $TECS at $5 profit, next week I reinvest the freed cash into $TECS but it never recovers and I never sell it so at the end of the year I am negative $10 on the stock. What are the tax mechanics in this scenario (yes I should consult an accountant but I’m hoping for redditor wisdom). I’ve read of how people sell at a loss for tax reasons so if I sold TECS at a loss would this cancel out the tax caused in this mini scenario?
Otherwise, why should I never ever day trade on my commission-free account?
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