How Does ‘Spoofing’ or ‘Wash Trading’ Distort the Perception of Volume and Spread?

Wash trading artificially inflates trading volume by having the same entity buy and sell the same asset, creating a false impression of high activity. Spoofing involves placing large, non-bonafide orders (bids/asks) to manipulate the order book depth and spread, which are then canceled before execution.

Both distort the true liquidity and activity levels.