What is a wash sale?

A wash sale is a form of market manipulation in which an investor simultaneously buys and sells the same financial instruments to create misleading, artificial activity in the marketplace. First, an investor will place a buy order, then place a sell order to buy/sell from himself or an affiliate, or vice versa. This may be done for a number of reasons, including to artificially increase trading volume, giving the impression that the instrument is in higher demand than it actually is.

Wash sale trading is not permitted. If three wash sale trades occur in your account in the same security, you will be restricted from trading the security.