Financial spoofing is a technique of stock market manipulation which consists
of offering securities for sale or purchase with the intention of canceling
the order just before it is executed, in order to obtain a favorable movement
prices
Spoofing is an illegal form of market manipulation in which a trader places
a large order to buy or sell a financial asset, such as a stock, bond or
futures contract, with no intention of executing. By doing so, the trader—or
"the spoofer"—creates an artificial impression of high demand for
the asset. Simultaneously, the trader places hundreds or even thousands
of smaller orders for the same asset, profiting on the increase in price
brought about by the large fake order, which is then cancelled.
Spoofing is also known as bluffing, and has been around for decades as
traders attempt to take advantage of other market players by artificially
inflating—or deflating, as the case may be—the price of an asset.
The technique has perhaps become more common, or at least gained more
notoriety, in the 2010s because of the advent of speedy, high-volume and
omputer-driven trading systems. During this time, it also attracted
the notice of securities regulators and law enforcement officials.
Spoofing is considered manipulative because the trader would not have
achieved the price on the actual orders without first obtaining that
price by virtue of the large bogus order.