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wash trading

Wash trading is a practice that involves artificially increasing the trading volume in the market through fake transactions, usually carried out by one person or a group. It is one form of market manipulation aimed at misleading other investors about the actual liquidity of a particular asset.

The Process of Wash Trading

A person or group engaged in wash trading conducts fake transactions that are reported in the market, but in reality, there is no participation from other investors. The aim of this practice is to create the impression that the asset has high demand or supply, which may prompt other investors to buy or sell.

Effects of Wash Trading

Wash trading can lead to artificial inflation of the prices of financial assets or market manipulation. Typically, individuals involved in such activities seek quick profits at the expense of other investors who are misled about the real market situation.

Regulations Concerning Wash Trading

Wash trading is illegal and constitutes a violation of market regulations. Financial supervisory organizations as well as exchanges take measures to detect and eliminate such activities. Investors should be aware of the risks associated with market manipulation and avoid engaging in transactions suspected of wash trading.

Wash trading is a negative phenomenon in the world of finance that harms honest investors and can mislead the entire market. Therefore, it is important for investors to be aware and vigilant to avoid the traps of market manipulation.


20 December 2024 | 15:01

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