Definition
Front-running is a trading practice where a participant places their own order ahead of a large or market-moving order they are aware of, aiming to benefit from the price change that order will cause. In crypto markets, this can occur on centralized exchanges or on-chain when someone observes pending transactions in the mempool and reorders or inserts their own transaction first. The core element is the use of advance knowledge of another participant’s trade to gain an unfair price advantage. It is widely regarded as abusive market behavior and may be illegal or against exchange rules, depending on the jurisdiction and venue.
Front-running is closely related to execution quality and trading costs, as it can worsen slippage for the original trader whose order moves the market. In derivatives such as perpetual futures, front-running can occur when traders anticipate large position openings or closings that may trigger cascades of liquidations. The concept is distinct from normal speculative trading because it relies on privileged or early access to order information rather than independent market analysis. In many systems, technical and policy measures are introduced to reduce opportunities for front-running and protect fair price formation.
Context and Usage
In practice, front-running often appears in discussions about order execution, slippage, and the integrity of trading venues. When a trader’s large order is front-run, their effective entry or exit price can be significantly worse than expected, which may also affect related risk controls such as take-profit orders. In leveraged trading and perpetual futures markets, front-running of large orders can amplify volatility and contribute to sudden liquidation events for overexposed positions.
The term is used both in traditional finance and in crypto, but in blockchain environments it also covers behaviors enabled by transparent mempools and transaction ordering. In that context, front-running is sometimes discussed alongside other transaction-ordering issues that influence how fairly prices are discovered. Overall, the presence or absence of front-running risk is a key factor in assessing how trustworthy and efficient a trading or execution environment is.