Quote Stuffing
Quote stuffing is a high-frequency trading (HFT) strategy where large numbers of orders are rapidly placed and then canceled, with the aim of creating artificial market activity. This tactic can disrupt normal trading by overwhelming the market with a flurry of quotes, potentially delaying competitors' trades or creating false impressions of liquidity. Quote stuffing is considered a form of market manipulation, as it can create an unfair trading environment and reduce market transparency.
Example
A trader uses an algorithm to place thousands of buy and sell orders in milliseconds and then cancels them almost immediately, creating temporary market noise that can confuse other market participants.
Key points
• A high-frequency trading tactic involving rapid placement and cancellation of orders.
• Creates artificial market activity, potentially delaying other traders’ actions.
• Considered a form of market manipulation that can reduce market transparency.
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