Web Trader MT5
Wash trading is an illegal form of market manipulation where a trader (or colluding parties) buys and sells the same asset to create a false impression of activity, demand, or price momentum. No real economic change happens, but the market may appear busy or bullish.
It is often called round-trip trading because the trader may end up in the same position, while making the market appear active. Unlike genuine trading, there is no real change in ownership or investment interest.
Wash trading can appear in stocks, commodities, crypto, and even NFTs. It is often linked to market manipulation schemes such as pump-and-dumps, where fake activity draws in real buyers before prices collapse.
Example:
A trader uses two accounts to repeatedly buy and sell a low-volume token. Reported volume surges, other investors assume the asset is gaining momentum, and they start buying. Once the price rises, the manipulator sells for profit.
It’s important not to confuse wash trading with a wash sale. A wash sale is a tax rule involving selling at a loss and rebuying within 30 days. Wash trading, by contrast, is intentional deception and is illegal.
