What is Iceberg Order?
Iceberg Order is a term that refers to the completion of the transaction by dividing the total order amount into small pieces in cryptocurrency trading. The Turkish equivalent of the term is “Iceberg Orders”.
What is Iceberg Order?
This crypto term, which means “Icedagi Orders” in Turkish, means that the total amount of orders placed when buying and selling digital assets is divided into small parts. In such transactions, users resort to this strategy to hide the real order amount.
Transactions are essentially like icebergs. In other words, although certain operations are performed on the visible side of the iceberg, there are more extensive operations on the unseen side.
What is the Purpose of the Iceberg Order?
The purpose of this process varies according to the actions taken by the users. Generally, the aim of providing privacy and preventing possible volatile price movements is at the forefront.
For example, if a user wants to perform a large transaction but does not want this transaction to be heard, it would be best to use this technique. Thus, it is possible to make purchases without attracting attention in the order book with the small orders placed.
However, users who want to place a large sales order but do not want to experience panic by minimizing the loss of value that will occur with the realization of the sale can use the Iceberg Order technique.
How to Create an Iceberg Order?
Traders can identify Iceberg Orders by looking for a series of constantly reappearing limit orders from a single market maker. For example, an institutional investor might split a one million share purchase order into ten different orders for 100,000 shares each. Traders need to watch closely so that they can notice this pattern and understand that these orders are being filled in real time.
Investors who want to take advantage of these dynamics can step in knowing that there is strong support from the iceberg order and buy shares just above these levels, creating an opportunity for scalping profits. In other words, iceberg order(s) can serve as reliable support and resistance areas that can be evaluated in the context of other technical indicators.
For example, a day trader may notice high levels of selling volume at a particular price. He can then look at the Level 2 order book and see that most of this volume comes from a series of similarly sized sell orders from the same market maker. As this could be a sign of an iceberg order, the day trader may decide to short the stock due to strong selling pressure from the continuous flow of limit sell orders.
Exchanges usually prioritize orders in the order in which they are received. In the case of an iceberg order, the visible part of the order is executed first. The hidden part of an order is executed only after it becomes visible in the order book. If traders have placed orders similar to the iceberg order, these orders are executed after the visible part of the iceberg order.