Layering

Layering is a form of market manipulation where a trader places multiple orders to create the illusion of demand or supply, with no intention of executing those orders. This artificially influences the price of a security, enticing other traders to react to the false signals. Once the price moves in the desired direction, the trader cancels the original orders and profits from the price movement. Layering is illegal and closely monitored by financial regulators.

Example

A trader places several large buy orders for a stock, creating the appearance of strong demand. Once other traders start buying and the price rises, the trader cancels the orders and sells their existing shares at a higher price.