Definition of Churning





What does the term "churning" mean? What is meant by the term "churning"?

"Churning", as it applies to the stock market, can actually mean one of two things.

Definition of term Churning in financeFirst, "churning" can refer to the practice of a broker making unnecessary and excessive trades in their client's accounts in order to generate commissions. This practice is forbidden (re: NASD Fair Practice Rules) and is a serious breach of broker/client trust.

Second, "churning" can also refer to a period of time when the markets are trendless and seemingly stuck in the mud, but there is still heavy volume. Many people refer to the markets during this time as being in a "churning" state




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