How Do Wash Trading and Spoofing Differ from Front-Running?
Wash trading involves simultaneously buying and selling the same asset to create a misleading impression of trading volume, often to manipulate price. Spoofing is placing a large order with no intent to execute, then canceling it just before execution to manipulate the price or mislead others.
Front-running is using non-public order information to trade ahead. All three are forms of market manipulation, but they use distinct mechanisms and intent.
Glossar
Front-Running Trade
Trade ⎊ A front-running trade is a predatory practice where a trader exploits their knowledge of a pending transaction to execute a trade before the original transaction is confirmed.
Spoofing
Action ⎊ Spoofing, within cryptocurrency derivatives and options markets, represents a deceptive trading practice involving the placement of orders intended to create a false impression of market activity or interest, without the actual intention to execute those orders.
Proving Manipulative Intent
Evidence ⎊ Proving manipulative intent requires the collection and rigorous quantitative analysis of trading data to establish a clear pattern of behavior designed solely to deceive other market participants rather than to execute a genuine trade.
Wash Trading
Mechanism ⎊ Wash trading, within cryptocurrency, options, and derivatives markets, represents a form of market manipulation where an individual or entity simultaneously buys and sells an asset to create artificial volume and potentially mislead other market participants regarding genuine supply and demand.