It’s important to avoid trading with yourself, as this is considered a type of market manipulation called wash trading. Wash trades occur in a few different ways:
- When an investor is both the buyer and seller in a trade. In other words, the same investor is the decision-maker for both sides of a trade. (This can happen when trading on behalf of someone else, too, such as your partner, your children, or a company you own.)
- When an investor colludes with a broker to buy and sell the same security.
Wash trading misleads investors and is an illegal type of trading. Make sure you are familiar with all market conduct rules.
Wash trade example
How to avoid wash trades
To avoid wash trades, here are some guidelines to follow:
- If possible, log in and use our portfolio transfer option to move your positions between accounts. We can move your instruments outside of the exchange, so it does not become an official trade.
- Always make sure you do not already have a buy or sell order in the market before placing another buy or sell order for the same instrument.
You can also use limit orders to avoid the trades matching on the exchange if you want to buy and sell the same instruments.