Skip to content
GetProfitable
Search
Dictionary

Spoofing

Placing large orders with the intent to cancel them before execution, to trick others about supply or demand; illegal in the US since 2010.

A spoofer might stack a huge bid to make a stock look supported, buy on the ask once others follow, then cancel the bid. The Dodd-Frank Act made it a crime, and traders have received prison sentences for spoofing futures.

It is why large orders on level-2 that appear and vanish should not be trusted as real interest.

Example: 50,000 shares appear on the bid at $20.00 for three seconds, price ticks up as buyers react, and the order disappears without a single fill.

Related: market-manipulation, level-2, order-book, cftc

Educational only, not advice. Spotted an error? Post in Site Feedback.