market participant could trigger virtually all stop orders just by
submitting a ridiculously low bid
Yeah, you are absolutely right about this. But as someone already have been noticed in US market investors are protected by NBBO and best execution/transparency in execution policies. Also there are various amount of mechanisms which protects free-market-system like: "Block trades", RFQ, min/max possible price (price couldn't be something like +/- XX% from last_traded_price in min_possible amount of time) as an effective mechanism which protect market from such events like "Knightmare", "Flash Crash" and "Fat Finger Error"
So theory is right, but the execution isn't possible anymore
As for some third-world countries (hello, moex!) with developing markets (especially @derivatives) it's a different story and you could do (almost) whatever you want. For example you could sell (minimum amount)x(equities) (shares/derivatives/currency) a bit below market price via limit order and your "last traded price" will trigger all the stops.
For example, scallywag years ago, some firm (let's call it db) use this strategy (called something like "splash-orders") for execution their own orders when they have been required maximum liquidity in one moment of time.
Truth be told it's all about exchanges policies and trading orders. There is a big difference between stop-order and stop-limit order.
- In first case you'll receive best matching price
- And in the second case your sell order will be triggered @your_price
And of course, price isn't always calculated and orders (which depending on price) don't match from "last_trading_price".
As for now, almost all of these "thicks" that you're talking about were fixed at the dawn of electronic trading.