SIE practice questionmediumOrder Types / Manipulation
A trader places a series of buy limit orders just below a stock's current price to create the illusion of market support, then cancels them before execution. This tactic is:
- AA legitimate hedging strategy
- BSpoofing, which is illegal market manipulation✓ Correct answer
- CPermitted if disclosed to the exchange
- DOnly prohibited for options trading
Explanation
Why B — Spoofing, which is illegal market manipulation
Spoofing is entering orders to give a false impression of demand or supply, without intent to execute. It is always illegal. Disclosure does not make it legal and it's prohibited for all securities, not just options.
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