Fictitious Trade

Filed Under » , ,
Dictionary Says

Definition of 'Fictitious Trade'

1) A trade that is booked with an execution date far in the future, and is adjusted to include the correct settlement and trade date when the transaction is completed. A fictitious trade is used in the processing of a securities transaction as a form of placeholder, and is found when open dates or rates are being used.

2) A securities order used to affect the price of a security, but which does not result in shares being competitively bid for and no real change in ownership. Wash sales and matched orders are a type of fictitious trade. A fictitious trade is designed to give the impression that the market is moving in a certain direction, when in fact it is being manipulated by a broker.
Investopedia Says

Investopedia explains 'Fictitious Trade'

For example, two companies enter into a series of ongoing transactions whose values are based on an interest rate set each week. Because the interest rate can change from week to week, an open execution date is used for the transaction until the interest rate is announced. Two transactions are recorded. The first is a cash transaction with a settlement date the same as the trade date; the second transaction has the same trade date but a settlement date several weeks later. Each week, the second transaction is updated to include the correct interest rate and settlement date.

Articles Of Interest

  1.

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.

  2. The Nitty-Gritty Of Executing A Trade

    Ever wonder what happens behind the scenes when you buy or sell a stock? Read on and find out!

  3. Direct Access Trading Systems

    DATs can dramatically speed up order execution - find out how this system gives novice traders an edge.

  4. Infamous Insider Traders

    Check out these bizarre insider trading cases that helped define the SEC's laws against it.

  5. Ancient Accounting Systems

    Learn how accounting evolved to keep records of increasingly complex transactions and civilizations.

  6. Can Insiders Help You Make Better Trades?

    Find out why the trading activity of owners and executives can be a valuable trade-confirmation tool.

  7. The Pioneers Of Financial Fraud

    These fraudsters were the first to commit fraud, participate in insider trading and manipulate stocks.

  8. Quit Your Job To Trade Stocks?

    Ready to quit your day job and become a full-time trader? These tips will help you determine your area of expertise.

  9. A Day In The Life Of A System Trader

    Systems traders divide their time between trading, developing, backtesting, optimizing and forward testing, to create viable and high-probability trading systems.

  10. Beginner Trading Fundamentals

comments powered by Disqus
Marketplace
Hot Definitions

  1. Network Effect

    A phenomenon whereby a good or service becomes more valuable when more people use it. The internet is a good example...

  2. Racketeering

    Racketeering refers to criminal activity that is performed to benefit an organization such as a crime syndicate. Examples of racketeering activity include...

  3. Lawful Money

    Any form of currency issued by the United States Treasury and not the Federal Reserve System, including gold and silver coins, Treasury notes, and Treasury bonds. Lawful money stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves.

  4. Fast Market Rule

    A rule in the United Kingdom that permits market makers to trade outside quoted ranges, when an exchange determines that market movements are so sharp that quotes cannot be kept current.

  5. Absorption Rate

    The rate at which available homes are sold in a specific real estate market during a given time period.

  6. Yellow Sheets

    A United States bulletin that provides updated bid and ask prices as well as other information on over-the-counter (OTC) corporate bonds...
Trading Center