Iceberg Order

An iceberg order is a large order that is divided into smaller orders, which are placed and executed gradually over time to avoid attracting attention to the overall size of the order. This type of order is often used by institutional investors who need to buy or sell a large amount of assets without causing significant price fluctuations.

The term “iceberg” refers to the fact that just like an iceberg, which only shows a small portion of its total size above the water, the visible portion of the order is much smaller than the total size of the order. The hidden portion of the order is not visible to other traders, and therefore does not affect the market price in the same way a large order would.

For example, let's say an institutional investor wants to buy 100,000 shares of a stock. Instead of placing a single order for 100,000 shares, they may place multiple smaller orders for 1,000 shares each, and only show a fraction of their total order at any given time. This allows them to avoid causing a significant price increase for the stock.

Iceberg orders can be placed on centralized exchanges as well as decentralized exchanges. However, they are more commonly used on centralized exchanges due to their ability to handle larger order volumes and provide greater liquidity.

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