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How Can ‘Volume-Weighted Average Price’ (VWAP) Be Skewed by Wash Trading?

Wash trading inflates volume at manipulated prices, causing the volume-weighted average price (VWAP) to be an inaccurate and skewed benchmark for execution quality.
Greeks.Live08.11.25

How Can ‘Volume-Weighted Average Price’ (VWAP) Be Skewed by Wash Trading?

Wash trading artificially inflates the trading volume at specific, often manipulated, price points throughout the day. Since VWAP weights the average price by the volume traded at that price, the fabricated volume from wash trades can significantly skew the calculated VWAP, making it an unreliable benchmark for legitimate traders attempting to execute block orders.

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