SIE practice questionhardOrder Types / Market Manipulation
A trader repeatedly places large orders to buy a stock, then cancels them before execution to create the illusion of demand. This practice is called:
- AInsider trading
- BChurning
- CSpoofing✓ Correct answer
- DHedging
Explanation
Why C — Spoofing
Spoofing involves entering orders with the intent to cancel before execution, manipulating market perception of supply or demand. Insider trading involves trading on non-public information, churning is excessive trading for commissions, and hedging is a way to reduce risk.
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