Fictitious Trades: The Meaning and Example You Should Know
Tuesday, 10 September 2024, 10:17
What Are Fictitious Trades?
Fictitious trades, including practices like wash sales and matched orders, are schemes involving trades that do not represent genuine transactions. Traders may create false demand or supply to mislead other participants.
Examples of Fictitious Trades
- Wash Sales: Selling and buying the same security to generate activity.
- Matched Orders: Two parties agreeing to trade at inflated prices.
Implications of Fictitious Trades
These trades distort market prices and can lead to serious regulatory actions. Traders should be aware of these practices and their potential legal repercussions.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.