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illegal trading strategies
- Thread starter firstchoice
- Start date
Quote from firstchoice:
What are some illegal stock or emini trading strategies that the average trader should be aware of. My small list below.
1. rebate trading
2. wash trade
3. front running
Anybody other ones?
Wash trades are not "illegal"...they simply have a different tax treatment.
OldTrader
Quote from OldTrader:
Wash trades are not "illegal"...they simply have a different tax treatment.
OldTrader
This is not correct.
A "wash sale", as defined by U.S. tax law, is the sale of a security within 30 days before or after the purchase of a substantially similar security. A "wash sale" is not illegal, though it does often receive a different tax treatment from other sales.
A "wash trade", on the other hand, is a trade of shares in a security, in which the same party takes both sides of the trade. A "wash trade", if done with intent to deceive, violates the anti-manipulation provisions of the Securities Exchange Act of 1934. http://www.sec.gov/divisions/corpfin/34act/sect9.htm.
Self-dealing is one of the few regulations that appears to be strictly enforced by the futures exchanges.
Quote from jimrockford:
This is not correct.
A "wash sale", as defined by U.S. tax law, is the sale of a security within 30 days before or after the purchase of a substantially similar security. A "wash sale" is not illegal, though it does often receive a different tax treatment from other sales.
A "wash trade", on the other hand, is a trade of shares in a security, in which the same party takes both sides of the trade. A "wash trade", if done with intent to deceive, violates the anti-manipulation provisions of the Securities Exchange Act of 1934. http://www.sec.gov/divisions/corpfin/34act/sect9.htm.
Good eye Rockford. I stand corrected. I mistakenly read "wash sale".
OldTrader
Quote from pumpkinhead:
Why do that? Why not just click on "reverse" and reverse your order?
I'm sure there is a strategy or reason to having two seperate accounts and trade the same contract, but I don't see it.
You can't be on both sides of the contract at the same time with Strategy Runners futures emini trading software. I tried with their paper trading account. It doesn't work. (strategy runner lied to me and told me that I can do this. I tried for myself. They lied. Some guy on the phone with a foreign accent - he was clueless).
Some of the swing traders like to do this. They will hold some contracts for days or weeks to catch bigger moves. Then they will have a second account that they do some daytrades with. So at times they will have longs and shorts open at the same time.
Regards,
4re
Going "short against the box" is illegal with equities because it is a form of tax fraud. The long position in the box would be held for more than 6 months and so would get a more favourable tax status, but by shorting the stock in another account (or purchasing a put), you have effectively sold. You may also be trying to defer the sale into another year if it will place you in a better tax bracket.Quote from ElectricSavant:
There is something with going long and short in the same instrument, at the same time in Futures, in diffferent accounts...
Because of the shorter terms on futures contracts, is this even an issue with futures?