Written by:
Image
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated September 30, 2020

What is Quote Stuffing?

Quote stuffing occurs when traders place a lot of buy or sell orders on a security and then cancel them immediately afterward, thereby manipulating the market price of the security. Manipulating the price of shares in order to benefit from the distortions in price is illegal.

How Does Quote Stuffing Work?

Let's say John Doe is a trader who owns 1,000 shares of Company XYZ in his personal account. He wants to make the price go up so he can sell the shares and make some money. To do this, he places 500 different buy orders for the shares. Other traders' computer systems notice the orders, figure demand for the stock is going up, and place orders for their own clients, thereby snowballing the effect and bidding up the price of the stock.

This all happens in a matter of seconds, during which John cancels his 500 buy orders and then sells his 1,000 shares of Company XYZ stock for a tidy profit. He has just manipulated the stock by quote stuffing.

Why Does Quote Stuffing Matter?

Quote stuffing relies on traders who want to manipulate the market; it also requires a computerized trading system. The large number of orders involved in quote stuffing can often freeze up trading systems and confuse computerized trading programs.

Ask an Expert about Quote Stuffing
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Quote Stuffing.
Be the first to ask a question

If you have a question about Quote Stuffing, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Quote Stuffing, then please ask Paul.

Ask a question Read more from Paul

Read this next

Don't Know a Financial Term?
Search our library of 4,000+ terms
Paul Tracy - profile
Ask an Expert about Quote Stuffing

By submitting this form you agree with our Privacy Policy

Share
close