What is Order Book Spamming?
Order book spamming is the practice of submitting numerous small orders into the order book to create a deceptive picture of market activity. This tactic can manipulate the market, offer certain traders undue advantages, and place a heavy burden on trading systems.
Why is Order Book Spamming Prohibited?
Unfair Advantage: Traders employing this strategy can gain an undeserved edge, especially in a simulated trading environment where the consequences are less severe than in live trading. This compromises the fairness and integrity of the trading platform.
System Strain: A high volume of orders can overload trading platforms, leading to delays and negatively impacting market stability and efficiency. This can result in slower response times and diminished performance for all users.
Example of Order Book Spamming:
A trader might submit numerous small orders (e.g., 0.1 lots) within a short timeframe instead of placing a single larger order (e.g., 1 lot). This behavior can be viewed as an attempt to manipulate the price feed in a simulated environment.