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What Is the Concept of ‘Wash Trading’ and How Does It Affect Perceived Liquidity?

Wash trading is simultaneous buying and selling to falsely inflate trading volume and perceived liquidity, distorting true market depth for manipulation.
Greeks.Live08.11.25

What Is the Concept of ‘Wash Trading’ and How Does It Affect Perceived Liquidity?

Wash trading is a manipulative practice where a trader simultaneously buys and sells the same asset to create a misleading appearance of market activity and trading volume. This artificially inflates perceived liquidity and volume metrics, which can attract unsuspecting traders or influence listing decisions.

While illegal in regulated markets, it is prevalent in less-regulated crypto exchanges, distorting true market depth.

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