Wednesday, October 27, 2010

Artificially Creating Market Volume

Wash Trading

An illegal stock trading practice where an investor simultaneously buys and sells shares in a company through two different brokers.

This increases the activity in the stock and gives the impression that "big news" is about to come out

Painting the Tape

The illegal practice in which traders buy and sell a specific security among themselves, creating the illusion of high trading volume and significant investor interest, which can attract unsuspecting investors who might then buy the stock and enable the traders to profit.

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