INTERMEDIATE // TRADING DESK
MODULE 03 // ABUSE PREVENTION

Market Manipulation Detection.

Detect spoofing, layering, wash trading, and other manipulative behaviors using ABIS behavioral analysis.

MANIPULATION PATTERNS

Market manipulation takes many forms, each with distinct behavioral signatures. Spoofing involves placing orders intended to be canceled to create false impression of supply/demand. Layering stacks multiple orders at different prices to move the market.

Wash trading involves trading with oneself to create artificial volume. Cross-market manipulation exploits relationships between correlated instruments. Each pattern requires specific behavioral analysis.

ABIS detects manipulation through pattern recognition: order sequences that match known manipulation patterns, behavioral deviations from trader baselines, and statistical anomalies in order flow that suggest artificial activity.

SPOOFING DETECTION

Identify orders placed far from market with high cancel probability. Track order/cancel sequences that move prices.

LAYERING DETECTION

Detect stacked orders at multiple price levels that are systematically canceled as market approaches.

WASH TRADE DETECTION

Identify self-trading through account linkage analysis, timing correlation, and counterparty patterns.

CROSS-MARKET MANIPULATION

Correlate activity across related instruments to detect manipulation strategies spanning markets.

KNOWLEDGE CHECK // Q03
Why is spoofing detection challenging despite clear regulatory definition?