Eli5 What does the term spoofing in finance mean?
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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.
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