Wash trading

Wash trading is the practice of buying and selling the same asset to create the false impression of trading activity, without any genuine change in ownership or real market risk. The same party, or coordinated parties, sits on both sides of the trades, inflating reported volume and potentially misleading others about how active or liquid a market is.

It is widely considered manipulative and is prohibited on regulated venues. Wash trades can distort volume rankings and interfere with fair price discovery. A common misconception is that high reported volume always reflects real demand; some figures may be inflated by wash trading, which is why observers scrutinise volume data.