Circular Trading

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DEFINITION of 'Circular Trading'

A fraudulent trading scheme where sell orders are entered by a broker who knows that offsetting buy orders, the same number of shares at the same time and at the same price, either have been or will be entered.

INVESTOPEDIA EXPLAINS 'Circular Trading'

These trades do not represent a real change in the beneficial ownership of the security.

RELATED TERMS
  1. Churning

    Excessive trading by a broker in a client's account largely to ...
  2. Cross Trade

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  3. Interpositioning

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  4. Front Running

    The unethical practice of a broker trading an equity based on ...
  5. Jitney

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  6. Guilt-Edged Investment

    An unethical investment that generates profits for the investor. ...
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