[olalonde]

If I understand correctly, the people harmed by the practice of spoofing are day traders who naively believe they can do technical analysis on an order book to determine the short-term direction of prices. Nope, I don't really feel sorry for either of them.

[arcticbull]

It disrupts price discovery and allows the market markers to move the market at will. It's not really relevant whether you personally love day traders. There's nothing illegal or immoral about day trading - but there is something illegal about market manipulation, and specifically, spoofing. At least in traditional markets.

[anonymoushn]

Day traders mostly don't even have access to real-time L2 market data, so they mostly can't be harmed by spoofing.

The harmed parties are algorithmic traders that use L2 market data to adjust their theoretical value.

[arcticbull]

I assume L2 in this context means level 2 and not layer 2?

[gpderetta]

yes, full depth (or at least multiple price levels), as opposed to L1, i.e. just top of book. L3 would be order-by-order.

[nly]

There are proprietary trading firms making hundreds of millions a year doing technical signal analysis.

[olalonde]

Well, more reason not to feel sorry for them.

[arcticbull]

That's not how crime works.