X. Strategy Trading Series Course - Iceberg Order

Introduction

Many well-known traders or institutions face problems when trading with large positions. Once the trading scale is large enough and the position is exposed, they may face many unnecessary troubles. For example, it's easy to trigger market follow-through, drive up market prices, and increase trading costs; or after the position is exposed, it reveals financial strength, making it easy to be targeted by counterparties, causing the trading to fall into a passive state.

How to solve these problems? Today, let's learn about the iceberg order.

I. What is an Iceberg Order

An iceberg order is a strategy of splitting large orders and placing them in batches. Order splitting is a convenient trading strategy provided for large traders. This strategy can help users split large orders into small orders and place them in batches. Through intelligent strategy settings, the strategy can minimize the impact of large orders on the market, thereby greatly reducing trading costs for large traders. Another similar order splitting strategy is the time-weighted strategy.

The iceberg order is an extension of the limit order. This trading mode is like a huge iceberg - only a very small part is visible, while the vast majority is hidden beneath the water. Iceberg orders use this method to hide investors' actual trading volume.

The characteristics of iceberg orders are: splitting large orders, hiding orders, and reducing slippage. The order price is calculated based on the current best bid/ask price and the price distance set by the user. Small orders are then automatically placed for trading. When the previous order is fully executed or the latest price significantly deviates from the current order price, it automatically re-places the order. This reduces impact on the order book and slippage; trading is completed below the set limit price, hiding one's own trading.

II. Glossary

How to understand the strategy's related terms?

1. Order Price Distance from Order Book

This parameter is used to determine the price distance/ratio. Taking buy orders as an example, it means when below the limit price, how much space should be taken downward to place an order. This parameter should not be too large, because the further from the best bid/ask price, the lower the probability of the order being executed.

2. Order Limit Price

The order limit price is an important parameter for the strategy to start and pause placing orders. Taking buy orders as an example, the strategy only starts placing orders when the market price is below the order limit price. It's best to select support and resistance levels for this data, which helps the strategy quickly become profitable.

3. Single Order Amount

The single order amount is not the amount for each order, but the maximum value of the order amount. Moreover, each order amount is random: single order amount * (random number between 0.5-1).

4. Total Order Amount

The total order amount is the expected total volume to be executed. When the total executed volume equals the total order amount, the strategy will stop.

III. Strategy Demonstration

Iceberg orders can be used not only for spot trading but also for perpetual contracts, delivery contracts, and margin trading, with a very wide range of applications. How does an iceberg order work?

Taking buying as an example, when the market price is above the order limit price, the strategy pauses placing orders.

When the market price is below the order limit price, the strategy resumes placing orders and places buy orders at a set distance from the order book. For example, if the limit price is 1600 and the order price distance from order book is set to 10, then when the market price is below 1600 and the best bid price is 1598, the strategy places a buy order at 1588. After the previous order is executed, it re-places the order until the total order amount is fully executed.

The schematic diagram is as follows:

Taking selling as an example, when the market price is below the order limit price, the strategy pauses placing orders.

When the market price is above the order limit price, the strategy resumes placing orders and places sell orders at a set distance from the order book. After the previous order is executed, it re-places the order until the total order amount is fully executed.

The schematic diagram is as follows:

IV. How to Use Iceberg Orders

On the app, in strategy mode on the trading page, you can select iceberg order from the strategy list. Taking the ETHUSDT perpetual contract as an example, using the iceberg order strategy to execute below 1580 U, with an order limit price at 15 U, single order amount of 2 ETH, and a total of 20 ETH to be executed.

After successful order placement, you can see your current position in [Strategy] - [Iceberg Order] below. Executed positions can be viewed in [Current Position], and unexecuted order portions can be viewed in [Current Order]. You can also enter [Strategy Details] to view the current strategy's [Strategy Information], [Execution Records], and other content. This helps you understand how the strategy operates.

V. Important Notes

1. Taking buying as an example, the order is placed by the strategy using a price that takes a certain price distance/ratio downward from the best bid price. It is not a market price or limit price. This point should be noted.

2. When the price distance between the best bid price and the order exceeds price distance * 2, the system will automatically cancel the order and re-place it.

3. If during the strategy's operation, the trading pair encounters unforeseen abnormal situations such as trading suspension or delisting, the iceberg order strategy will automatically stop.

Key Points of This Issue

Disclaimer

This article may contain product-related content that is not applicable to your region. This article is intended to provide general information only and does not take responsibility for any factual errors or omissions therein. This article represents only the author's personal views and does not represent the views of OKX. This article is not intended to provide any of the following advice, including but not limited to: (i) investment advice or investment recommendations; (ii) offers or solicitations to purchase, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holding digital assets (including stablecoins) involves high risk, may fluctuate significantly, and may even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For questions about your specific situation, please consult your legal/tax/investment professional. The information appearing in this article (including market data and statistics, if any) is for general reference only. Although we have taken all reasonable precautions in preparing these data and charts, we accept no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be reproduced or distributed in its entirety, or excerpts of 100 words or less from this article may be used, provided such use is non-commercial. Any reproduction or distribution of the entire article must also prominently state: "Copyright © 2025 OKX, used with permission." Permitted excerpts must cite the article name and include the source, for example "Article Name, [Author Name (if applicable)], © 2025 OKX". Some content may be generated or assisted by artificial intelligence (AI) tools. Derivative works or other uses of this article are not permitted.

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