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How Do These Practices Distort the Perceived Liquidity of a Derivative Contract?

They artificially inflate the reported trading volume and order book depth, misleading traders about the contract's true liquidity.
Greeks.Live24.11.25

How Do These Practices Distort the Perceived Liquidity of a Derivative Contract?

Spoofing and wash trading artificially inflate the perceived liquidity and trading volume of a derivative contract. Spoofing creates a false impression of deep order book depth, encouraging other traders to enter.

Wash trading creates an illusion of high activity. Both make the contract appear more liquid and actively traded than it truly is, potentially misleading investors and attracting higher trading fees for the exchange.

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