Well, for one thing, if you are "trading" you are not really an investor. If you decide to short term trade then you have no choice than to have to pay the higher rate tax that they hit you with - unlike the 15% for long term. For me it is well worth it. If I understand your point, I think what you are saying is that if you buy/sell one particular stock and make a decent profit on it, then you buy it back and sell it for a loss, you still have to pay a higher tax rate (say 28% or whatever your rate is) on the original purchase. Is this what you saying? If so, this is true, but the loss you also are reporting and it brings down your capital gain. One of the trickiest things about trading is to be able to take a profit, and then not to give it back. I for one am a trader and I could never make the money I make if I bought stocks and just held them long term.