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All trading involves risk. Losses can exceed deposits.
Crystallisation definition
All trading involves risk. Losses can exceed deposits.
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.
Visit our education section
For more on how to take tax and charges into account when trading, visit our education section.
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