I want to dispel a common misconception that I think is displayed here. You can't exactly manipulate the market without taking on risk and that's without even saying that manipulating the market is illegal and it's something you can go to jail for. The rule is something along the lines that every order that you put out into the market has to be an order that you are willing to trade on. If the SEC can prove that you have a strategy where the orders you put into the market are not genuine then you are in big trouble.

The legality of it aside, you can't manipulate the market without taking risk on. Think about it. To change the price of a stock upwards you would have to buy all the resting orders at all the exchanges until the price was actually at a higher level. Now if you want to profit from that upturn guess what? It's kind of hard because now your holding a whole bunch of shares. So buy 10,000 at 12.99 and sell 100 at 13.00 doesn't exactly work.

The manipulation that I am more familiar with (usually reported by nanex.net are algos mesing with other algos. Picture putting a bunch of resting bids on one side of the book this might make some dumb strategies think that the market is going to move up so they buy then the algo that put the false resting bids sell to the confused algo willing to buy at a higher price level. Then the algo buys back the shares when the price comes back down to its normal level. This is illegal but it's also a reason why strategies don't usually act on anything but trades, because you don't know if a bid is a true willingness to buy. Aside from what I described resting bids could just be a holding spot for a trading strategy that is waiting for separate market centers to converge or waiting to fulfill an order for one of its clients.