Put simply, a short ladder attack is when both sides of the buying and selling of stocks are played (by traders) in an attempt to devalue the stock in question. Short ladder attack, e.g. Short A sells a fake share at $10. Short B buys it, covering open position. Short B then offers a fake share at $9.

How does a ladder attack work?

A short ladder attack has multiple moving parts. The process starts when a firm or fund takes on a sizable short position in a stock. From there, they will do what they can to lower the stock's value. ... Companies use other hedge funds and brokers to pull the stock's value down by pulling out of their positions.

Is laddering illegal?

Laddering is an illegal IPO practice in which the underwriter engages in the sale of IPO shares to clients with the implicit agreement that more shares will be purchased post IPO, leading to big gains for both parties. Once the price increases a certain level, "insiders" then sell their shares and take their profits.