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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    The Wash-Sale rule was established to disallow a loss deduction of a security sold, if within 30 days of the date of the ... Read Full Answer >>
  2. 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 Full Answer >>
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