An Indian trader allegedly made $50 million using spoofing, a market-manipulation technique where you place fake orders to move prices, then cancel them before they execute. It's illegal and the SEC catches it.
$50 million
Spoofing
"deep charts"
This Indian trader crashed the stock market while trading from his childhood bedroom and making $50 million by using this manipulation technique that is technically illegal, but I'll explain you anyways. Just promise me you won't use it. Because trust me, they'll catch you. In every market there is something called the order book where you have buy orders below price and sell orders above the price. These are called passive orders, also known as resting liquidity. And it's one representation of the buying and selling pressure in a market. Maybe they put stocks to sell here and stocks to buy here. So what this guy did is he placed a huge order slightly above the current of, let's say, a thousand stocks. So when the rest of the traders saw this, they started selling like crazy. But these are orders he doesn't really want to fill. It's just a big sell order that will eventually be deleted just to scare people and induce them to sell so that his real order can buy here. And as soon as he deletes this order. So because of this big order, market dropped here where his real order is, he actually wanted to buy. So as soon as he buys here, he will delete his order. People understand it was all fake and they'll start buying again. Price will move higher and higher and higher and he will be profiting. This is called spoofing. And with the software like deep charts, you can actually see the real time buying and selling pressures. So if you suddenly see big volume rising here of sell pressure being deleted all of a sudden, then you can front run the guy and make some money as well. You're welcome, but you better not do it yourself. And then put a big order and delete it, and put it and delete it because the exchanges now know it and they'll catch you. But if someone else does it, you can front run them and as always, trade safe.
