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Crystallisation definition
Crystallisation is the term used when a trader or business closes a position and then reopens an identical position immediately.
In doing so, they are able to balance out the net value of their assets by quickly realising a loss or profit, without losing the position that they believe can still bring more profit. Mostly this is done for tax purposes: allowing a trader to realise a capital loss and pay any charges on it immediately.
Most countries have tax regulations in place to prevent the practice of crystallisation.
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For more on how to take tax and charges into account when trading, visit our education section.
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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.