Trying to figure out if I've been thinking about wash sales the wrong way.

If I'm day trading xyz stock and playing the swings because it's volatile enough to stick with it, do I need to worry about wash sales? I'm not looking to claim losses, but I'm wondering if I'm increasing my tax basis cost.

Ex.
xyz trading for 10 and I buy 1 share (just easy numbers here).
some news comes out and it dips down.
I cut out at 9.80 because I feel it's going to go a bit further down.
I buy back in at 9.20 (which triggers the wash rule and the loss from 10-9.80 is disallowed)
I then later sell it at 10.

In this super simple example (yes, I left out SEC fee, but let's just say that doesn't exist here), I lost .20 on my initial purchase, then gained .80 from the second. this plus the left over (.60) from my original $10 balance, would provide a value of $10.60.

At this point, I've gained .60 and i'm not looking to claim any losses, because at the end of the day, i've made a profit. but am I on the hook for a greater tax position on my capital gains than just my .60 gain from where I started?

The loss gets rolled into the cost-basis of the next transaction. So as far as the IRS is concerned, you bought at 9.40, not 9.20. My brokerage will show it that way for the cost basis (and I assume most/all do). Thinking of it in those terms allows you to be able to think about what would happen with no growth or a loss on the 2nd transaction. The losses roll with you. If you got slammed again, and sold at 9, you're now at a 0.40 loss - and hopefully you stay away from XYZ for awhile because "fool me twice shame on me."

Now I'll also mention a specific case that no one ever told me about and I wish I didn't learn this after doing it...

If you sell XYZ at a loss in your taxable account, but then buy it again within 30 days in a tax-deferred IRA, the loss is gone. It doesn't roll into anything else, it vanishes. And what's worse, brokerages do a poor job telling you about this on their tax forms because they're separate accounts. So you won't even know that you had a disallowed loss. Now it may not ever get caught by the IRS, but that's a different matter.

And another...

Brokerages also don't track wash sales well with options, and many people get confused by that. But best I can tell, most experts agree that options that have the same mechanism for the same underlying equity fit the definition of "similar" regardless of if they have different dates/strikes. Your brokerage will only track exact matches (if you bought the exact same call, for example), but the law says "similar."

I did not know that about Roth IRAs.