Long-term investors make fewer transactions, which means lower brokerage fees, bid/ask slippage and commissions. For U.S. investors, long term gains are taxed more favourably than short-term gains (not an issue for Canadian investors). Frequent buying and selling in day trading can result in substantial costs that erode profits. But it is the taxes that hurt the most. If you have a successful day trade, that’s great. But if you are in a 50 per cent tax bracket, because of capital gains taxes, you now have about 25 per ent less capital deployed in the market than a long-term investor. This reduced level of capital is a giant disadvantage to traders. Long term investors simply compound their capital and pay no taxes (other than on dividends) until their position is sold.

One of the issues with day traders and their lack of success is that most, after a while, get the feeling that they ‘need’ to be trading. But not every day provides good trading opportunities. Like a gambler in Vegas, staying at the table (or trading) longer than you should is a pretty-much guaranteed way to lose money. Day traders have difficulty stepping away from the game, as they fear missed opportunity. Long-term investing requires much less daily involvement. You do not need to monitor the market constantly or make split-second decisions. This makes it ideal for individuals with full-time jobs or other commitments, and it also reduces the emotional stress associated with reacting to every market movement. Day trading, on the other hand, is highly time-intensive and emotionally demanding, often leading to burnout and impulsive decisions.