What Is “Layering” and How Is It Related to Spoofing?

Layering is a specific form of spoofing. It involves placing multiple non-bona fide limit orders at various price levels on one side of the order book to create a false impression of market depth and directional interest.

Once the price moves due to the induced trading activity, the manipulative trader quickly cancels the layered orders and executes a trade on the opposite side, profiting from the artificially created price movement.