Spoofing in trading is placing orders with the intention of canceling them before execution to mislead the market. The displayed orders create a false impression of supply or demand instead of expressing a genuine willingness to trade on those terms.
What an order book can conceal
A large apparent buy wall may suggest strong support, while an apparent sell wall may suggest selling pressure. If the orders were entered without a genuine intention to execute, that picture can be deceptive. Layering is a related practice involving misleading orders at multiple price levels.
This differs from wash trading, which uses executed or purported trades to create artificial activity. Spoofing chiefly concerns deceptive orders and their intent, even when those orders never become trades.
Why cancellation alone is not proof
Legitimate traders frequently revise or cancel orders as prices, inventory or risk limits change. A high cancellation rate or a disappearing wall does not establish manipulation by itself. Assessment requires context, including the intent when orders were entered and surrounding activity.
CME’s rules prohibit specified disruptive order practices, including orders entered with intent to cancel before execution. Other instruments and jurisdictions have their own rules. Visible order-book depth should therefore not be treated as guaranteed liquidity.