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Finance GlossaryWash Trade
Wash Trade
Definition of Wash Trade
A wash trade is an illegal trading practice where the same investor simultaneously buys and sells a security to create artificial trading volume. This misleading activity gives the impression of market interest or price movement without any real change in ownership, often used to manipulate market sentiment.
Related Terms
Capital Asset Pricing Model
Capital Asset Pricing Model or CAPM is used to determine the expected return one can earn on an asset by evaluating the associated risks and how markets price the asset.
Ichimoku Cloud
Ichimoku Cloud is a group of technical indicators that’s used to understand trends, momentum, support,
and resistance by calculating averages.
Furthermore, the Ichimoku Cloud indicator is made up of two components:
- TenkanSen: The short-term indicator
-
KijunSen: The long-term indicator
There’s a cloud that’s formed as a result of plotting the averages and using the components on a chart.
One glance at this cloud can tell you multiple things like:
- Uptrend: If the price is above the cloud
- Downtrend: If the price is below the cloud
- Neutral: If the price is in the cloud
Moreover, if the cloud and the price are moving in the same direction, there’s much more confidence in the
trend that’s forming. In fact, it’s a trading signal.
Derivatives Trading
Derivatives trading means buying and selling derivatives contracts like futures, options, swaps, and forwards either on an exchange or over the counter.
Trading derivatives means trading contracts that derive their value from an underlying asset like stocks, commodities, currencies, indexes, interest rates, and more.
The buyer of the contract can decide to take delivery to the underlying asset or offset it with an opposite contract.
Trading derivatives means trading contracts that derive their value from an underlying asset like stocks, commodities, currencies, indexes, interest rates, and more.
The buyer of the contract can decide to take delivery to the underlying asset or offset it with an opposite contract.
Cash Flow Statement
A cash flow statement is used to present the amount of money that has been earned and spent by a business over a specific period of time. There are three sections or parts to a cash flow statement:
- Operating Activities: cash flows from the core activities of a business that generate income as well as cash equivalents (current assets & liabilities)
- Investing Activities: cash flows from investments or sales of long term assets
- Financing Activities: an action or activity that brings a change in a business’ equity capital and/or borrowings
Narrow Market
A narrow market describes a situation where only a few stocks or sectors influence market movement, while the majority of stocks have low trading volume. It has few active participants on either the buy or sell side of the market. This limited participation suggests that the market trend is not broadly supported across the entire market.
52 Week Low
A 52 week low is the lowest closing price of a stock or ETF in the last 365 days. Let’s say you check a stock’s history on 01-01-2022. Then the 52 week low will be the stock’s lowest closing price between 01-01-2021 and 01-01-2022. 52 week lows are used as technical indicators by traders.
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