Layering
Market Microstructure glossary · High Frequency Dynamics & Latency Arbitrage
Definition
A spoofing-related manipulation in which a trader places multiple orders at successive price levels on one side of the book to create a false impression of demand, then trades on the other side.
Layering in plain English
Layering is a form of market cheating (a type of "spoofing") where a trader stacks up a bunch of fake orders they never intend to fill, just to trick everyone about supply and demand. For example, they place many fake buy orders to make it look like a stock is in hot demand, luring others to push the price up — then they quietly sell at that inflated price and cancel the fakes. It's like starting a fake bidding war at an auction so the real bidder overpays, then you slip out the back. It's illegal because it manipulates people with lies about how much interest really exists.
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