He may have started with 20K, but he had incredible leverage at that propshop and when he went out on his own I believe he started with 6-700K. Can double check the actual figure later.
I think that market makers and other HFTs are the ones who’d need SPY and stocks to arbitrage or hedge, but not large buyers whose goal is to buy, not to hedge. So if you‘d pose as a large buyer then you could trick others to trade and hedge and do whatever they need to do to produce the flow for that buyer. Or possibly they could hedge after trading with/against that /ES buyer, who just turned out to post fake bids. And I think /ES is the main source of volume for S&P 500, so that’s what they’d target. If SPY was the main source of volume then it could’ve been targeted instead.
I think he made a small fortune during the 2008, early 2009 volatility using legit methods, starting with not much capital. I would guess when markets changed in late 2009, it wasn't as easy to make money using those same methods. It seems like he switched to spoofing around that time instead.
In "prop times" he used clip of 69, averaging up to about 1600-1700 lots. After that in "basement time", hard to say. About all the situation, it's easy: - you are financial institution form inside the US nad you are spoofing - it's ok, nothing happened - you are "small guy" from inside the US and you are spoofing - warning, but it's not bad - you are financial institution from outside the US and you are spoofing - come on, it's game for "our" guys, don't do that - you are "small guy" from outside the US and you are spoofing (and kicking asses of the US financial institutions that are drying all the financial markets) - root in hell
From Wikipedia: "Under the 2010 Dodd–Frank Act spoofing is defined as "the illegal practice of bidding or offering with intent to cancel before execution." Spoofing can be used with layering algorithms and front-running,activities which are also illegal. Guys, as spoofing the market is not legal best to move on to other discussions rather than sound like you are seeking a method.