Iceberg Order

An iceberg order is a large order to buy or sell a cryptocurrency or asset, broken down into smaller parts to hide the total order size. Only a portion of the order is visible to the market at any time, with the remaining portion being revealed as the visible part is filled. This strategy helps reduce market impact and avoid price manipulation.

How Iceberg Orders Work

When placing an iceberg order, traders specify the total order size and the visible portion, known as the “peak.” As the market fills the visible portion, the next portion of the order becomes visible. This continues until the entire order is executed. Iceberg orders are commonly used in markets with high liquidity to avoid slippage or large price swings.

Why Iceberg Orders Are Used

Iceberg orders are often used by institutional traders or large investors who want to avoid revealing their trading intentions to the market, which could lead to unfavorable price movements. By breaking up large orders, they can execute trades more discreetly and minimize the impact on the asset’s price.

Benefits and Risks

• Benefits: Helps in executing large trades without influencing market prices too much, improves discretion, and reduces slippage.
• Risks: If too many small orders are placed in succession, they could still raise suspicion and lead to adverse market reactions.