It's been a volatile year in the markets. Some trades worked, others maybe not so much.

Now's a good time to see if you can use those losses to your advantage at tax time.

It's called tax loss harvesting, and here's how it works.

Say you bought 1,000 shares at $50 and sold at $60.

That's a $10,000 capital gain.

Then another investment, well, it dropped.

You bought 1,000 shares at $50 and the stock price fell to $37.

If you sell, you can lock in a $13,000 capital loss.

You could use that loss to offset your gain dollar for dollar.

So a $13,000 loss cancels out a $10,000 gain, meaning no capital gains tax.

And you can carry leftover losses forward, plus deduct up to $3,000 a year against income.

But watch the wash sale rule.

If you sell a stock for a loss and buy the same or, quote unquote, substantially identical one within 30 days, you can't claim that same loss.

Now, Fidelity says one work around is switching from an individual stock to an ETF or a mutual fund in the same industry.

But cryptocurrency, well, that's different.

Crypto doesn't have the wash sale restrictions.

You could sell at a loss and buy back immediately.

But don't wait to harvest losses this year.

Traders must settle before the final market close, that's at 4:00 p.m. Eastern on December 31st.