We all are aware that if someone places huge buy or sell orders for any crypto project the price either goes up or comes down very fast.
To overcome this, an iceberg order tool is used, which maintains the demand and supply, even though the order value is very huge.
What is an Iceberg order?
An iceberg order is a way to buy & sell large amounts of cryptocurrencies. This service is used by big investors or institutional investors who want to place huge orders.
Let’s understand this with an example.
Imagine: a crypto trader wants to buy or sell 1000 Bitcoin (BTC) at once. If he places an order it can be visible in the order book and this can cause market disruption of BTC, as a huge buy or sell order has been placed by a user.
In order to bypass this, the user places an order in a set of 100 BTC, so no one notices these orders, as it is divided into smaller chunks and the market volatility is maintained.
Why use an Iceberg order?
By using the Iceberg order tool, the buyer or the seller is simply avoiding panic in the market. Based on the plan to execute its buy or sell order, the user executes in a very structured manner.
The order can be placed for the long term or even in an intraday trade. That means that if a user wants to execute an order during the daytime, it can be possible.
Suppose a user wants to place an order with the rate he/she intends to buy or sell – it can be placed in the time frame of 1 to 120 minutes intervals.
The user can also select a limited order or can buy/sell at market rates.
Who uses iceberg orders?
Iceberg orders are often used by big investors or by large institutional investors.
They are also known as reverse orders, which are mostly used by market makers that make an offer for buy & sell.
When it comes to such big crypto transactions, we all are aware there are some big names that can place an order that can disrupt the market. This is also not good for them, so these investors use this tool to save the market from huge impact because of their orders.
If you see the order book properly, you can see the set of orders placed in buy & sell. A regular user can find out the first order, as the order sets are not seen until the first set of orders is executed.
That is why it is called the iceberg order because you can only see the tip of the ice, not the complete iceberg that hides below the tip.
Once the first set is executed, the second set appears, and so this happens until all the ten sets are cleared.
For smaller investors placing an order through an iceberg tool is very unusual, as they don’t have depth in their order book, so for them, this cannot be a useful tool.
Only for users who want to go deep in buying/selling crypto at a much higher level, an iceberg order tool can do magic.
How do iceberg orders work?
Once the user has decided to use an iceberg order tool, he/she needs to divide the order book into smaller quantities. By doing this, the user has just become a common user with no adverse impact on the market prices.
The main goal of the user is to execute the orders, because, if you are trading you don’t want crypto rates to inflate or drop all of a sudden.
How to place an iceberg order?
In order to place an order, a user must select a crypto exchange where he/she can have direct access to the order books and the market.
The use of Iceberg chart trading is not possible on regular trading platforms. Users can only place iceberg orders on crypto platforms that have direct market access (DMA), which is only available on strong technologically developed platforms.
User needs to open an account in that crypto trading platform that has such a tool and place their first order by using the Iceberg order tool.
Once you have decided how much to trade and open an account, you can start trading. As soon as the price set in your iceberg order is triggered, the buy or sell option is executed.
Every exchange has its own limitation in setting the iceberg order. Some allow only 10 sets, some more than that. Always check for the best exchange that has such a service.
If a user wants to sell 10,000 BTC by using the Iceberg order tool, a user will be required to set 10 different orders of 10 sets each.
By using an iceberg tool, a user can become a responsible trader, as he/she is not disrupting the market as a whole and also supporting himself/herself to own the crypto assets at the prices they are looking for.
