Most commonly spoofing is entering large orders without intent to trade, with the aim of moving the price of the market.
E.g. you might have a bunch of some stock, you enter even more buy orders just below the market price. Other traders see this, think that there’s a big buyer and drive up the price.
Then you pull all the orders while selling your position at the higher price.
Another example would be to do a similar thing, but where you have a derivative position that’s dependent on that stock’s price, the derivatives can change in price due to your false orders on another instrument.
ELI5: a trader starts throwing out fake trading information on securities to make it appear that the price of a security is trending in a direction that would help them financially. For instance if a trader owns a bunch of Euro, they might start “faking” trades successively to make it appear that the price of the Euro is rising throughout the day. They then swoop in and sell their Euro at this higher “spoofed” price to profit. Basically they put out fraudulent information to the market to make it appear as though people are trading securities at higher and higher prices.
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