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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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