What is an iceberg order in the crypto world?

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You can execute various orders on the crypto market, and also on the regular exchanges with meme token. Limit orders, stop order, direct order, you name it. An iceberg order is slightly more complex and is all lucrative if you work with large amounts. If you want to make large investments, it is wise to seek financial advice so that you do not become the victim of sudden price increases or decreases. In this article I explain everything about what an iceberg order is, why you should use this order type and for whom it is interesting. I also tell you how to identify these orders in the order books and I conclude with how to place an iceberg order yourself. Are you reading along?

What is an iceberg order?

We also call an Iceberg order an iceberg order, iceberg order or iceberg order. If you want to trade in crypto, you have to deal with many different order types. If you already have some experience in trading, then you have certainly heard of limit orders, stop order and market order. If you are not yet familiar with this, then this article by my colleague Matt is highly recommended! He explains the different order types in a simple way.

Meaning of Iceberg order

Well, this was pretty much the introduction to what you’re really looking for. An iceberg order is especially interesting for traders who deal with large sums of money, because it is a way to buy or sell large amounts of cryptocurrencies. You may now be thinking: why so? You can also simply invest a large amount on the stock exchange and that’s it.

You are absolutely right about that, but if you move with large investments on the (crypto) market, this will stand out. You cause shifts, as a result of which that large investment of yours does not turn out as positively as you had thought in advance.

Imagine you buy 50,000 Bitcoin ( BTC ) in one go. This trade stands out in the order books, unintentionally attracting the attention of other investors. This can lead to a disturbance of the market, with a possible drop in the value of the currencies as a result.

By dividing that large order into several small orders, the transaction will not stand out as much. A series of smaller trades don’t stand out in this booming market, so you’re in the right place. If someone does notice, then the transaction has already been carried out by you, so there is nothing that can be changed.

They don’t call them iceberg orders for nothing, because you only see the tip of the iceberg. The rest of the big mountain is under water, so not visible to the rest of the market.

Who uses iceberg orders?

If you as a private individual occasionally shift a few tens back and forth, then this is not an interesting matter for you. Iceberg orders are usually used for large investors or market makers. Market makers are firms (or individuals) who quote buy and sell prices in the hope of making a profit on the spread between fluctuating prices. You will encounter these large amounts with crypto fanatics, but institutional investors, they really make the most use of this.

Because they trade with large sums of money, this can have a huge impact on the market. You can find the orders in the order books, but then you have to know what to look out for. A small percentage of the total order volume can be found in the level 2 order books. In the crypto world, this is the place where bids, demand, price, volume and a timestamp are collected. A large data collection with all useful information about trades.

Why use iceberg orders?

Iceberg orders can therefore prevent panic in the market, that is the most important. Usually, investors get help in executing these orders, as it has to be executed on the basis of a logistical plan. If you do not do this, chaos will take place and there is a chance that you will still go wrong.

The broker executes the trades until the schedule is completed by executing the last order. Suppose you want to buy 10,000 BTC, then the broker divides this order into small pieces. The schedule could look like this:

  • Buy 2500 BTC as first order;
  • Buy 3000 BTC as second order;
  • Buy 2000 BTC as third order;
  • Buy 2500 BTC as last order.
  • Example iceberg order

To clarify the picture, I have another example for you! There is a large retirement mutual fund and they want to invest $6 million in a certain cryptocurrency . If they were to bring this out as news, prices would soar, making it no longer beneficial to invest. To avoid these disruptions, they are splitting large order into parts of roughly $500k.

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