Layering

Layering

Definition

A market-manipulating strategy in high-frequency trading in which a trader enters orders he does not intend to execute for the purpose of influencing the stock price. If a trader wants to buy a stock at a lower price, he will place numerous sell orders he has no intention of filling to create the false impression of heavy selling pressure and drive down the stock price. If a trader wants to sell a stock at a higher price, he will place multiple fake buy orders to trick other market participants into believing there is buying interest, which will drive up the price.

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