Wash Trading

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DEFINITION of 'Wash Trading'

The process of buying shares of a company through one broker while selling shares through a different broker. Wash trading can also make a stock's volume appear to have a lot of activity resulting from the repeated buying and selling done by an individual or firm when, in fact, the shares have never changed owners.

INVESTOPEDIA EXPLAINS 'Wash Trading'

Wash trading is illegal, as it is done in order to manipulate the market and prompt other investors into buying the position. A quick turnaround in positions isn't considered wash trading, as long as the transaction creates market risk for the trader and changes their market position, even if only temporarily.



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    Wash trading is an illegal trading activity that artificially pumps up trading volume in a stock without the stock ever changing ... Read Full Answer >>
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    The only meaningful difference between market-risk premium and equity-risk premium is scope. Both terms refer to the same ... Read Full Answer >>
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