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spoofing is largely defined in its relationship to people submitting large orders that they intend to cancel for the purpose of moving the market. so, while the rest of the market thinks there is buying or selling pressure coming from the spoofer's large order, the spoofer has private information that he does not intend to actually trade that large order. he simply wants to move the market towards one of his much smaller orders, and get it filled instead. then, he cancels the large order, and the market in theory should revert back to its old price, because the information that a large order will be moving the market has been taken away. now, what's important is that the spoofer actually has to send a large order. and even if he has no desire or intention of getting it filled, it's still available to be filled. so, if someone thinks a market is going up, but there isn't enough liquidity for him to express his opinion, he could wait for a spoofer to come along to inadvertently provide liquidity with a large offer, and trade with that offer before the spoofer has time to cancel.



What you describe isn't someone taking advantage of the spoofer's intention not to actually trade, though. Or rather, it's not someone who has perfect information using that information to understand that the spoofer's order does not represent actual knowledge. It is, in fact, someone who has limited information and believes the market does not reflect reality, and then using that to place an order that just happens to use the spoofer's order. So in this case, it's no different at all from them trading with a market maker.

Also, I would assume spoofers don't typically place orders in illiquid markets, precisely because they risk having someone use their new order as a source of liquidity. I mean, spoofers don't actually want their orders filled. Plus, the whole point of the spoofed order is to trick market makers into moving their positions, and if the market isn't liquid then clearly there's no market makers (because if there were market makers, then the market would be liquid), and if there's no market makers then spoofing isn't going to work to begin with.




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