Daisy Chain

DEFINITION of 'Daisy Chain'

A group of unscrupulous investors who, practicing a kind of fictitious trading or wash selling, artificially inflate the price of a security so that they sell it at a profit. Price manipulation is typically very difficult in stocks with heavy volumes, so the stocks with low liquidity are much more susceptible to daisy chains.

BREAKING DOWN 'Daisy Chain'

Investors who do not look carefully at a stock are the usual prey of a daisy chain. As a stock rises due to increased volume, investors who didn't do all their homework may be attracted to the stock because they want to participate in the rising price. These investors are typically caught owning a stock that continues to depreciate long after the daisy chain sells out their positions for a profit.

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RELATED FAQS
  1. What is a "daisy chain"?

    A daisy chain is a term used to describe a group of investors who engage in activities that inflate or deflate the price ... Read Answer >>
  2. What is the difference between supply chain management and value chain management ...

    Discover what the principal differences are between utilizing a supply chain management system and a value chain management ... Read Answer >>
  3. What are some advantages and disadvantages of value chain analysis?

    Learn about the five activities that make up a generic value chain. Understand the advantages and disadvantages of value ... Read Answer >>
  4. What is the difference between a value chain and a supply chain?

    Understand the difference between a value chain and a supply chain. Learn why a company would want to maximize the value ... Read Answer >>
  5. What is the difference between wash trading and insider trading?

    Explore the differences between two trading practices, wash trading and insider trading, and find out why these practices ... Read Answer >>
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