What is an Iceberg order and how to use it?

Investors divide a large order into several small pieces and place them on the market 1:1.

When investors want to buy or sell large quantities of crypto, they use iceberg orders. They want to trade but don’t want to upset the market. By dividing their order into smaller parts, they do not influence the demand or supply on the market because they stay off the radar. 

The main goal of those investors is to execute all of their orders at the desired price. For example, when you’re selling or buying large amounts of BTC, the last thing you want as a trader is to inflate the price of a currency because of buying pressure from other investors. 

But, how do you identify an iceberg order? To begin with, you need to start digging in level-2 order books. Level 1 provides the basic price data and keeps no details. Level 2 provides a lot more information and shows market depth up to 10 best bids and offer prices. 

When you’re looking for iceberg strategy orders, you need to use level-2 order books because when the first order in line is executed, the next part reloads. Take a deep dive into the trading columns and look for orders with a similar price. It’s all about the pattern.