DEFINITION of 'Wash'
A series of transactions that results in a zero net sum gain. This can be the result of a loss on one investment and a gain on another or it can be the result of buying and selling the stock of a single company. Investors should be aware of the fact that there are tax consequences to certain wash situations.
A wash is sometimes referred to as a "break-even" proposition.
BREAKING DOWN 'Wash'
In addition to tax consequences - investors are prohibited from claiming losses on an investment if they repurchase it (or something very similar) within 30 days of selling it - some wash sales are illegal. For example, if an investor buys a stock in with one brokerage firm, he or she cannot legally sell it through another for the purpose of stimulating investor interest. This is known as a "pump and dump."