A placeholder quote, also known as a stub quote, is a buy or sell order that is purposefully set much lower or higher than the current market price by market makers so that they can meet liquidity obligations. The orders are never executed. Placeholder quotes can have an adverse impact on markets and the SEC seeks to reduce them.<\/p>" } } , { "@type": "Question", "name": "Is Spoof Trading Illegal?", "acceptedAnswer": { "@type": "Answer", "text": "
Yes, spoof trading was made illegal by the Dodd-Frank Act<\/a>. Spoof trading is when a large amount of buy/sell orders are placed in the market but then never executed. The goal is to manipulate the price of a security by driving its price up/down in order to gain an advantage on the price movement. It's important to note that no actual trade takes place in spoofing, the orders are canceled before execution. Spoofing is done to create the illusion of the demand or lack thereof, of a security.<\/span><\/p>"
}
}
,
{
"@type": "Question",
"name": "What Is a Wash Trade?",
"acceptedAnswer": {
"@type": "Answer",
"text": " A wash trade<\/a> is when a trader buys and sells the same security to create a false impression that there is increased volume in the specific stock. This may actually affect legitimate trading on the security.<\/p>"
}
}
]
} ] }
]