tax loss harvesting

Definition

The process of a trader selling stock at a loss in order to counteract gains in another investment. The trader tries to balance out the two, so that he/she does not have an elevated tax liability at the end of the year. The trader does run the risk of selling an investment at a loss that would have become very profitable in the near future. Due to tax loss harvesting, the stock market may become volatile as the end of the year approaches.
Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
tax loss carryforward tax lot