Spoofing and flickering depth: why displayed size can not be trusted

[Amanhasnoname]

Depth-of-market displays show orders waiting at various prices. It's tempting to treat big numbers as support or resistance. They deserve skepticism.

Orders in the book can be cancelled in microseconds. Large visible size may be there to induce reactions, not to be filled. Spoofing, placing orders with no intent to trade, is illegal in regulated markets but still happens in various forms. In spot forex, the picture is blurrier still, since displayed liquidity is the broker's aggregate of quotes that may be indicative.

A pattern worth noticing: large size that appears when price approaches and disappears as soon as price touches it. That's a sign the size was never meant to execute.

Reliable information comes from what actually trades. Executed volume, the speed of price movement through levels and how price reacts after contact all matter more than static numbers.

Treating displayed depth as a hint rather than a fact avoids a lot of false confidence.

Have you been fooled by a wall that vanished?