Iceberg order, this mysterious and fascinating term, hides a special form of transaction in the financial market. In the stock market, iceberg order refers to large transaction orders that are divided into smaller orders and placed gradually to avoid causing too much impact on the market. The impact of this trading method is far more than just the surface. It involves factors such as market liquidity, price fluctuations, investor psychology, etc., which affect the operation of the entire financial ecosystem. Let us explore in depth, unveil the mystery of iceberg order transactions, and see what impact it has.

 The impact of iceberg order on market liquidity

One of the characteristics of iceberg order is to split large transactions into multiple small orders and place them gradually. This method can effectively reduce the impact on market liquidity. Taking a company's stock as an example, if a large sell order is placed at one time, it may cause a sharp drop in stock prices, trigger panic selling, and then affect the stability of the entire market. Through iceberg order, traders can complete transactions without causing too much fluctuation, which is conducive to maintaining the smooth operation of the market.

 The impact of iceberg order on price fluctuations

The batch ordering method of iceberg order also affects price fluctuations. In trading, if a large buy order is placed at one time, it may cause the price to rise instantly, and the batch order of iceberg commission can avoid this situation. By buying gradually, traders can get a better average cost, while also reducing the impact of price fluctuations on trading results, and improving the stability and predictability of trading.

 The impact of iceberg commission on investor psychology

Iceberg commission also affects investors' psychology to a certain extent. For investors who pay attention to market trends, seeing the emergence of large iceberg commissions may cause a certain degree of panic. They will begin to speculate on the trading intentions behind them, which will affect their own trading decisions. This psychological impact may cause the market to overreact, aggravate price fluctuations, and even form a vicious circle. Therefore, the existence of iceberg commissions also requires investors to remain calm and rational and avoid being swayed by market sentiment.

 The secrecy and risks of iceberg commissions

The reason why iceberg commissions have attracted much attention is not only because of the particularity of its trading method, but also because of the risks brought by its secrecy. Due to the particularity of iceberg commissions, it is difficult to accurately detect this trading behavior through market data, which provides the possibility for some investors to potentially manipulate the market and free ride. In this case, regulators and investors need to be more vigilant, strengthen market monitoring, and guard against potential risks.

 Future development trend of iceberg commissions

With the continuous development of financial technology and the improvement of market supervision, iceberg commissions are also evolving. In the future, with the widespread application of technologies such as algorithmic trading and big data analysis, iceberg commissions may become more intelligent and precise, providing investors with a better trading experience. At the same time, regulators will also increase supervision of special trading forms such as iceberg commissions to maintain market fairness and justice.

 Summary

As a special trading method, although iceberg commissions appear to be just a strategy of placing orders in batches on the surface, their impact involves market liquidity, price fluctuations, investor psychology and other aspects. Understanding the characteristics and impact of iceberg commissions will not only help investors better grasp the market, but also promote the stability and healthy development of the financial market. In future trading practices, investors and regulators need to be vigilant about iceberg commissions and jointly maintain market order and fairness. Let us pay attention to the mysterious and important trading form of iceberg commissions, draw more trading wisdom from them, and help ourselves gain greater benefits in the financial market.

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When trading large amounts of digital assets, the market price may be affected by the huge transaction amount, especially for digital assets with poor liquidity, a large buy order can pull the market.

Similarly, a large sell order can smash the market. So, is there a way to complete large transactions without excessively affecting the market price? In fact, it can be achieved by choosing iceberg entrustment when trading.

01. What is iceberg entrustment

Iceberg entrustment is a type of order, which means that when investors conduct large transactions, in order to avoid causing too much impact on the market, they split large buy orders/sell orders into multiple small buy orders/sell orders, and adjust the entrustment price according to the latest market price fluctuations, and reduce the impact of large orders on market prices through continuous small orders.

In plain language, it means: splitting large buy orders or sell orders into multiple small orders for batch trading, which can reduce the price impact on the market. However, manual splitting is not required. When the iceberg entrustment order type is set, the splitting process is automatic.

02. Scope of application of iceberg commission

As one of the order types, iceberg commission is suitable for splitting large orders, thereby reducing the impact on market prices.

For example, when conducting large-scale selling transactions of digital currencies, setting the order type to iceberg commission can reduce the impact of large-scale selling orders on market prices; similarly, when conducting large-scale buying transactions of digital currencies, it can prevent the increase in price caused by large-scale buying orders and increase in one's own buying costs.

At present, many trading platforms have iceberg commissions in the order types.

03. Example of iceberg commission

The following is an example of iceberg commission-buy on a certain platform.

Xiao Wang wants to buy a total of 800,000 USDT of BTC, but does not want to increase his buying costs due to the large number of pending orders. At this time, he can set the order type to iceberg commission.

Xiao Wang sets the total amount of buy orders to 800,000 USDT; the average amount of each order can be set to 8,000 USDT (the actual amount of each order will fluctuate between 90% and 110%); use the order depth to control the position of the order in the order book transaction depth; set the maximum buy price: 8,100 USDT to control the upper limit of the buy price.

Therefore, Xiao Wang's iceberg order is set as follows:

Total amount: 80,000 USDT; Single amount: 8,000 USDT; Order depth: 0.1%; Maximum buy price: 8,000 USDT.

What does this iceberg order mean?

Xiao Wang wants to buy 800,000 USDT of BTC. In order not to affect the market price too much, he uses the iceberg order type to trade in small batches; each batch of BTC is commissioned to buy 8,000
USDT (the actual order will float between 90% and 110%); and the commissioned purchase price is: the latest buy 1 price  (1 - 0.1%); and the maximum purchase price is set: 8,100
USDT, indicating that the purchase price will not be higher than 8,100 USDT.

After setting, click the "Buy" button, the system will make an iceberg order for Xiao Wang, and according to the rules set above, one transaction will be completed and the next transaction will be commissioned.

When the "latest transaction price" deviates too much from the commission price, the order will be automatically cancelled and re-commissioned; when the "latest transaction price" is higher than the "highest buy price" set by Xiao Wang, the commission will be stopped and resumed when the latest transaction price is lower than the highest buy price set by him; when the "total transaction volume" of the commission is equal to the "total commission volume", the commission will be automatically stopped.

The process is represented by a graph as follows:

As shown in the figure above, when the latest transaction price is lower than the "highest buy price" set by Xiao Wang, 8100 USDT, the system will make continuous commissions, and when the latest transaction price is higher than the "highest buy price" set by Xiao Wang, 8100
USDT, the system will stop the commission.

The above is an iceberg commission-buy. If you want to make a large-scale sale of digital currency, you can also set an iceberg commission. The principle and process are the same as the above example, so I won't go into details here.

In short, if you want to make large-scale transactions of digital assets and don't want to affect the market price too much, just choose the iceberg commission as the order type.