Spoofers Tricked High-Speed Traders by Hitting Keys Fast

Bloomberg reports:

Spoofing, sometimes called "layering," is a form of market manipulation where you pretend you want to sell a lot of stock, and everyone's all, "Oh in that case I want to sell a lot of stock too," and the stock goes down, and you actually buy a bit of stock instead, and you wait like a second and then pretend you now want to buy a lot of stock, and everyone's all, "Oh well now I want to buy a lot of stock too," and the stock goes up, and you actually sell back the stock you bought, and you make some money because people are sheep.

This strategy is risky -- what if people buy stock from you when you're pretending you want to sell it? -- and also sort of irreducibly stupid, as it relies on people robotically assuming that the stock is in trouble when you pretend you want to sell it, and then assuming that it's a great buy a second later when you pretend you want to buy it. But since most of the people in stock markets these days are robots, relying on them to act like robots can actually work, and you see the occasional lucrative spoofing case where someone builds a robot to out-spoof the other robots.

And then there is Aleksander Milrud, who allegedly built his spoofing robot out of lots of human traders in China and Korea and maybe elsewhere. Milrud was charged with spoofing today by federal prosecutors and the Securities and Exchange Commission, making him by my count only the second person to be charged with criminal spoofing.

How much stock market volume is fake?