An illegal manipulative trading practice which involves entering into, or purporting to enter into, transactions in a way that gives the appearance that a trader has made purchases or sales, even though without having the trader’s market risk changed or adjusted or without changing the trader’s net position.

For example, an investor might simultaneously buy and sell stocks in a given company through two different brokers in order to give the impression that a substantial trading activity is taking place. That will potentially draw in other investors, having the effect of shifting real market mechanisms based on false pretensions. Most exchanges prohibit wash trading.