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Iceberg orders

on Thu Dec 12 | Updated on Thu Dec 12
iceberg orders 
Buying back right now

Using  iceberg orders 0.01 - 0.03% distance for better execution

Most difficult part is deciding which one to buy over the other. Still dust in the air

what does this tweet mean what is iceberg orders and how it work I need theory tell me in simple terms with bullet points

Explanation of iceberg orders

Tweet Breakdown

  • “Buying back right now”: The person is purchasing assets (likely stocks or cryptocurrencies).
  • “Iceberg orders 0.01 – 0.03% distance”: They’re using a trading strategy called “iceberg orders” to buy small portions at regular intervals within a narrow price range (0.01–0.03% difference).
  • “Most difficult part is deciding which one to buy over the other”: They’re uncertain which asset (or trade opportunity) to prioritize.
  • “Still dust in the air”: Market conditions are unclear or volatile, adding uncertainty.

What Are Iceberg Orders?

Iceberg orders are a trading technique used to execute large orders without significantly impacting the market. It works by splitting the order into smaller, visible portions while hiding the bulk of the trade.

How It Works (Simple Terms)

  • Purpose: Avoid revealing a large order to the market, which could affect prices.
  • Method:
    1. Break down a large trade into smaller, visible pieces.
    2. Only a fraction (e.g., 10%) of the full order is shown on the order book at any time.
    3. As the visible portion is filled, another small portion appears until the entire order is completed.
  • Execution: Automated through trading software or algorithms.

Benefits of Iceberg Orders

  • Reduces the chance of market manipulation or price movement caused by large orders.
  • Helps traders execute at better prices without creating volatility.
  • Keeps trading activity discreet.

The timing for creating an iceberg order depends on your trading strategy, the market conditions, and the asset you’re trading. Here are some key points to consider:

Optimal Timing for Iceberg Orders

  1. During High Liquidity Periods:
    • Use iceberg orders when the market is most active (e.g., during opening hours or peak trading times).
    • High liquidity helps your smaller chunks fill more easily without large price impacts.
  2. In Volatile Markets:
    • Iceberg orders are effective during periods of high volatility, as they prevent drawing attention to your large trades and avoid slippage.
  3. Near Support/Resistance Levels:
    • If you anticipate the price to bounce off a support or resistance level, placing iceberg orders near these levels can help you get better fills.
  4. Gradual Trend Movements:
    • Ideal for trending markets where you don’t want to disrupt momentum but still want to accumulate or distribute over time.
  5. Avoid Low-Liquidity Times:
    • Avoid placing iceberg orders during low trading activity (e.g., off-hours) since fewer participants may result in your chunks being unfilled.
  6. Triggered by Price Thresholds:
    • Set iceberg orders to activate based on specific price thresholds (e.g., after a breakout or when the asset enters your target price range).

Tips for Timing Execution

  • Smaller Intervals During Fast Movements:
    • Use shorter intervals (e.g., 1-5 seconds) for high-frequency markets to stay competitive.
  • Larger Intervals for Long-Term Accumulation:
    • Use longer intervals (e.g., 5-15 minutes or hours) if your goal is slow accumulation without revealing your intent.
  • Dynamic Adjustments:
    • Monitor the market and adjust the timing based on activity, spreads, and price action.

How to Perform Dynamic Adjustments

  1. Monitor Market Activity:
    • Volume Trends: Watch trading volume. If it spikes, shorten intervals or increase visible portions since high liquidity can absorb larger chunks without moving the price.
    • Order Book Depth: Check the depth of the order book. If there are thick buy/sell walls, adjust the iceberg size to match or stay below the average visible orders.
  2. Spread Analysis:
    • Tight Spread: When the spread (difference between bid and ask prices) is small, reduce the size of your iceberg chunks to avoid signaling large trades and to stay competitive.
    • Wide Spread: Increase chunk size slightly to reduce the total execution time, especially in low-volatility periods.
  3. React to Price Action:
    • Strong Trends: If the price is trending rapidly, place chunks closer together (shorter intervals) to ensure you’re not left behind.
    • Sideways/Range Movement: Spread out chunks and use longer intervals to avoid revealing your strategy in a less dynamic market.
  4. Adjust Based on Volatility:
    • High Volatility: Keep chunks smaller and execution intervals shorter. This reduces the risk of slippage and unexpected price movement.
    • Low Volatility: Increase the size of chunks and widen the intervals since price changes are minimal.
  5. Watch for Market Imbalances:
    • Bid/Ask Dominance: If buyers dominate the market, set intervals to execute faster to avoid missing out on the price increase. If sellers dominate, slow down execution to avoid buying into falling prices.
    • Liquidity Gaps: If you notice large gaps in the order book, avoid placing visible chunks there to prevent triggering sudden price jumps.
  6. Timing with News or Events:
    • Avoid placing iceberg orders just before major news releases or economic events to reduce the risk of unfavorable fills due to sudden volatility.
    • Use faster intervals post-event if the market moves predictably or slower intervals if the market is chaotic.
  7. Set Automated Triggers:
    • Use trading software or bots to dynamically adjust:
      • Visible Size: Increase or decrease based on the size of visible orders in the book.
      • Execution Speed: Slow down or speed up depending on market activity.
      • Price Levels: Execute only within certain ranges to avoid chasing bad prices.

Tools to Aid Dynamic Adjustments

  • Market Data Feeds: Use real-time price feeds and order book data to make informed decisions.
  • Trading Bots/Algorithms: Implement bots that adjust iceberg parameters automatically based on rules you set (e.g., thresholds for volume or spread changes).
  • Analytics Tools: Leverage analytics platforms to track trends, sentiment, and liquidity metrics.

Example: Adjusting Iceberg in Real-Time

  • Scenario: You’re buying a large position in a cryptocurrency with a tight spread.
    • Initial Strategy: Visible size = 5 BTC, interval = 10 seconds.
    • Adjustment:
      • If volume spikes, reduce interval to 5 seconds and keep size at 5 BTC.
      • If spread widens, increase visible size to 10 BTC but lengthen the interval to 15 seconds to avoid overpaying.


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