What is wash or box trading?

[zivone]

I've been researching about what affect the price of bitcoins and I've come across this term that I cannot comprehend since English is not my first language am not really good at it. To quote and unquote what I read "the price is being bid up and up by trading bots and box accounts selling coins back and forth with no ownership change (wash or box trading) to drive the price up."

[LMGTFY]

I've been researching about what affect the price of bitcoins and I've come across this term that I cannot comprehend since English is not my first language am not really good at it. To quote and unquote what I read "the price is being bid up and up by trading bots and box accounts selling coins back and forth with no ownership change (wash or box trading) to drive the price up."

"Wash trading" is when one person (or company) trades with itself, to make the price seem higher. The text you're quoting suggests that a trader uses two different "bots" (computer software) to trade - right now the BTC/USD price is around $360, and this trader sets one of the bots to offer 1 BTC for $365. The other bot then accepts the offer (it buys the BTC), and the BTC/USD is now $365. At this point the trader hasn't gained or lost any money - they've paid an extra $5 for 1 BTC, but they paid it to themselves. Next, they try and sell more BTC for $365, but to a "real" trader. If they succeed, they've driven the price of BTC up and made a small profit.

I'm sure this does happen, but I'm not convinced it's that big a problem. There's a great book about a stock trader from around 100 years ago. One of the pieces of advice he gives is "As I have said a thousand times, no manipulation can put stocks down and keep them down." In other words, it is possible to manipulate markets and change the price for a short time, but keeping the price at a "fake" level is much harder.

[zivone]

I've been researching about what affect the price of bitcoins and I've come across this term that I cannot comprehend since English is not my first language am not really good at it. To quote and unquote what I read "the price is being bid up and up by trading bots and box accounts selling coins back and forth with no ownership change (wash or box trading) to drive the price up."

"Wash trading" is when one person (or company) trades with itself, to make the price seem higher. The text you're quoting suggests that a trader uses two different "bots" (computer software) to trade - right now the BTC/USD price is around $360, and this trader sets one of the bots to offer 1 BTC for $365. The other bot then accepts the offer (it buys the BTC), and the BTC/USD is now $365. At this point the trader hasn't gained or lost any money - they've paid an extra $5 for 1 BTC, but they paid it to themselves. Next, they try and sell more BTC for $365, but to a "real" trader. If they succeed, they've driven the price of BTC up and made a small profit.

I'm sure this does happen, but I'm not convinced it's that big a problem. There's a great book about a stock trader from around 100 years ago. One of the pieces of advice he gives is "As I have said a thousand times, no manipulation can put stocks down and keep them down." In other words, it is possible to manipulate markets and change the price for a short time, but keeping the price at a "fake" level is much harder.

Thanks for explaining and putting it simpler for me. Now I understand it somehow. I'm a bit confused right now upon reading some views and speculations about the future of bitcoin. Both sides of "it will fail" or "it will succeed" seem to have good point and explanation so I don't know which to believe right now. I guess I need more a lot of reading to fully understand. Anyway thanks again.

[sgbett]

how does this work if there are asks in the 360 to 365 range

[bitmarket.net]

how does this work if there are asks in the 360 to 365 range

Let's say that the market right now is bid-360, ask-365.
A person wants to create an impression that the market is going up, so he first sends the order to sell at 364.99 and then a buy order, also for 364.99.

It is called "up-ticking".

Such practice is illegal on the traditional stock exchanges.

[NorrisK]

how does this work if there are asks in the 360 to 365 range

If the gap is very close between the bid and ask, it is impossible to manipulate it in this way. You will than have to buy coins from the asks in the range you want to manipulate, so it will potentially be costing you a lot in that way.

[var53]

how does this work if there are asks in the 360 to 365 range

If the gap is very close between the bid and ask, it is impossible to manipulate it in this way. You will than have to buy coins from the asks in the range you want to manipulate, so it will potentially be costing you a lot in that way.

I have witnessed thousands of Bitcoins traded in a two dollar gap between the bid and ask. There were no walls but the price failed to move significantly. Sometimes a one dollar gap is enough for wash trading, particularly if it's on an exchange with no trading fees. There are limits to how far wash trading can be taken though.

[hunnaryb]

Wash trading is a tool that is used to boost volumes whilst overall moving price.

The market maker will have control over a range where they are the majority of the orderbook. To achieve this they just soak up the supply at a lower range and make people buy back up high.