KOLIN LUKAS.

What is Spoofing in Financial Markets?

Spoofing is a form of market manipulation where a trader places fake buy or sell orders, never intending for them to get filled by the market. Spoofing is usually done using algorithms and bots in an attempt to manipulate the market and asset prices by creating a false sense of supply or demand.

Spoofing is illegal across many major markets, including the United States and the United Kingdom.

Preface

Many often talk about how large traders and whales manipulate the markets. While much of these theories can easily be disputed, there are some well-known methods of market manipulation that require large holdings. One of these is a technique called spoofing.

What is spoofing?

Spoofing is a way of manipulating markets by placing fake orders to buy or sell assets, like stocks, commodities, and cryptocurrencies. Typically, traders who attempt to spoof the market use bots or algorithms to automatically place orders to buy or sell. When the orders get close to getting filled, the bots cancel the orders.

The main idea behind spoofing is trying to create a false impression of buy or sell pressure. For example, a spoofer may set a large number of fake buy orders to create a false sense of demand at a…