Wash Trading Definition - Glossary

Wash trading is a deceptive practice where traders buy and sell the same asset to manipulate market prices and volumes.

Wash trading is a manipulative trading strategy where an investor simultaneously buys and sells the same financial instrument. This creates artificial activity in the market. By doing so, traders aim to mislead other market participants about the true demand for an asset. This practice can inflate trading volumes and distort price movements, making the market appear more active than it actually is. Wash trading is illegal in many jurisdictions because it undermines market integrity and transparency. Regulatory bodies actively monitor and penalize such activities to protect genuine investors and maintain fair trading environments.