TradingIntermediate#Scam#Manipulation
Wash Trading
W
Definition
A form of market manipulation where an entity simultaneously buys and sells the same asset to create fake volume/activity.
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Concept Diagram
Key Takeaways
1
Wash trading is creating fake volume by simultaneously buying and selling the same asset — 50-70% of some exchanges may be artificial.
2
Used to artificially inflate trading volume making a token appear more popular than it is
3
Some exchanges use wash trading to boost their ranking on volume-based aggregator sites
4
Identified by analyzing patterns like identical trade sizes and regular intervals between trades
Practical Example
A token shows $50M daily volume but on-chain analysis reveals 80% comes from two wallets trading back and forth in $100K increments every 5 minutes — classic wash trading to attract unsuspecting buyers.
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Related Terms
Blockchain
Market CapThe total market value of a cryptocurrency's circulating supply (Price x Circulating Supply).
Trading
Prop Firm (Proprietary Trading Firm)A company that provides traders with capital to trade in exchange for a profit split, usually after passing a challenge.
Trading
A-Book vs B-BookA-Book brokers pass trades to external liquidity; B-Book brokers take the opposite side of the client's trade.
Blockchain
Liquidity PoolA collection of funds locked in a smart contract used to facilitate trading by providing liquidity on decentralized exchanges.
Trading
SlippageThe difference between the expected price of a trade and the actual price at which the trade is executed due to low liquidity.
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