Trader Joe has purchased stock XYZ today for $4.00 a share and by tomorrow
finds out that his stock has soared to $6.00, a gain of ~50%.

Now...
Lets assume stock XYZ only gains another 5% the entire rest of the year to end up at a bare 55% for the year despite that amazing overnight rally, would you believe that Joe would be as well, if not better off hanging on to his stock for a year?
Because Joe will pay a whopping 25 percent or higher tax if he sells!

That's why Joe will lose out on that gain if he decides to lock in his profits by selling,
whereas if he holds on to it, the IRS will PAY Joe in ways of lowering his taxes.
Joe will only pay 5 to 15 percent or so tax if he holds on to it.
He pays half, literally HALF the tax by not selling.

Read: Joe gets paid cash money for doing absolutely nothing!

In graphical terms, lets assume Joe invested exactly a thousand dollars into XYZ.
Sell it the next day, Joe gets to pay at least $125 for that luxury.
So that out of that 50% gain he had $1,500 minus tax = $1,375 (assumed 25% tax)

Hold on to it for a year, Joe not only gets to pay less, but he gains more...
So that out of a 55% gain he has $1,550 minus tax = $1,480 (assumed 12.5% tax)
The IRS literally just paid Joe $100+ for being cool.

Sicker still, if Joe's stock XYZ stays at $6 and trades absolutely flat the whole rest of the year,
he still comes out $1,437.50 instead of $1,375... Joe gains $62 even if his stock doesn't, which
is like a free 4% interest for doing nothing.

Last but not least, Joe's stock XYZ could actually lose some money the entire
rest of the year and yet Joe would end up breaking even.

Therefore...
Would Joe be smart to hold on to it, or is Joe the kind of guy who likes to work hard for a buck?
My stake on it is that unless Joe has compelling reason to believe that stock XYZ is going to fall
and drop below its acquisition price and then not rise past it again...
Unless Joe is pretty darned certain of himself or his stock, he better not sell.

Puts a whole new twist on all that day trading, don't it?