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Wash Trading

Wash trading is a deceptive tactic used to artificially inflate market activity, tricking investors into believing there's more demand for an asset than there actually is. By buying and selling the same asset simultaneously, traders manipulate prices and create false market momentum.

Here's how it works: a trader uses multiple accounts to buy and sell an asset at nearly the same price, making it appear as though the market is active. This false activity can lure unsuspecting investors into buying in, only to suffer losses when the manipulation is exposed.

Illegal in many regions, wash trading can lead to hefty fines and bans, severely impacting market trust. Always be cautious and conduct thorough research before making investment decisions.