Is Spoofing alive and well? | Traders Hideout - futures trading strategies, market news, trading charts and platforms

Traders Hideout

Discuss day trading practices and futures trading strategies on this forum for all markets. This forum is also for discussing and reviews for brokers, data feeds, and commercial or third party add-ons


Is Spoofing alive and well?

  #5 (permalink)

North Carolina
Trading Experience: Beginner
Platform: NinjaTrader, Tradestation
Favorite Futures: es
Posts: 644 since Nov 2011

Why is it then that the CFTC ignores it? Sure, it made a poor lone trader such as Nav Sarao pay because he was spoofing all over, but this doesn't seem to have stopped everyone else doing it, does it?

There have been several prop traders fined for such activity. However, if an otherwise reputable institution engages in it or if a firm is achieving a certain number of fills then they may not be able to prove it and/or may deem it not a problem.

Well, my definition of spoofing assumes a basic level of understanding of order flow reading ability. So when I say 'spoofing' I am assuming we talk about a situation where a larger than usual resting set of orders is, say, 2-3 ticks above where price is being traded, and immediately decreases when price goes closer, and at the same time immediately increases back to the original level when price retraces back.

These could also be automated programs that are seeking to envelope the price. I've seen this behavior too, and suspect it is some form of liquidity provider. This is a different type of spoofer. These traders are more actively involved in spoofing but they are probably also filling a lot of orders. Why would they put the orders there? Maybe because they figure if there is a blip in the market that the price will mean revert but if they using some sort of value algo then the longer the price stays "close" to their order then that will change the calculation of their "moving average".

In some cases, these are eager traders too who may be running algos that wait for a certain amount of time for their order to fill. If it doesn't get filled and price is only a few ticks away, they may just go to market. Sometimes the orders are stuck traders who are trying to get out when the market trends against them. Other aggressive traders, think of as the the "hammer" sometimes will step up and also offer in the same area. This is usually in trending markets where the liquidity provider will turn taker at resistance.

Another possibility is I suggested, some liquidity/hft traders may put in orders but only execute them when they are best in queue. If a trader pulls order underneath them then it will mess up their algos and they may be "forced" to pull too.

Maybe someone has better ideas how these work and will add more.

Reply With Quote