This refers to a form of market manipulation wherein a trader simultaneously buys and sells a stock, or any other financial security, in the market. A wash trading scheme helps to create the impression that a security is being actively traded in the market and is thus in strong demand among market participants in general. This, in turn, can mislead other investors into buying the security and boosting its price. Brokers might also cooperate with traders engaging in wash trades simply because they can earn huge commissions in the process. Tax considerations at the end of a financial year may also push many regular investors to engage in wash trades.
