A bit of background. When humans are trading in a market with algos, some algos will beat them (ie, offer on top by a penny or two and then sell back for an extra penny to original trader). This works better if there is a large order underneath particularly that has to execute.
Brokers used to front run these orders in the past - which was illegal. But an algo bidding on top is fine because the order is by then public
So traders would trick the algo by placing some orders on the other side so the algo would get ahead of those instead (if there was more volume going that way) and execute against the position they had. Once the algo ran ahead of the opposite orders, they are cancelled out.
Anyways, this is not legal under current market rules, even though someone could execute against those orders while they were up.
One question - algo orders can be pretty darn abusive (but seem rarely prosecuted). Nutty cancel to fill rates, remember flash orders, quote stuffing etc etc...
Brokers used to front run these orders in the past - which was illegal. But an algo bidding on top is fine because the order is by then public
So traders would trick the algo by placing some orders on the other side so the algo would get ahead of those instead (if there was more volume going that way) and execute against the position they had. Once the algo ran ahead of the opposite orders, they are cancelled out.
Anyways, this is not legal under current market rules, even though someone could execute against those orders while they were up.
One question - algo orders can be pretty darn abusive (but seem rarely prosecuted). Nutty cancel to fill rates, remember flash orders, quote stuffing etc etc...