Wash trading detection is the surveillance work of identifying a wash trade: a transaction in which the same person, or parties acting together, is both buyer and seller, so that no real change of ownership or market risk occurs. Such trades create a false impression of volume or price and are a form of market manipulation prohibited in regulated securities and derivatives markets. Exchanges, brokers and regulators carry out detection as part of market abuse surveillance.
Surveillance systems look for buy and sell orders from the same account, beneficial owner or linked group that match each other at the same price and near the same time, for repeated round trips that leave positions unchanged, and for trading with no economic purpose. In crypto markets, where reported volumes have often been inflated, analysts add statistical tests of trade sizes and volume patterns and use blockchain analytics to link wallets under common control.