When you want to buy 1 Bitcoin, you don't need to worry too much about the type of order. However, if you want to buy 10,000 BTC, then you will understand that this is not an easy undertaking.
Large buy orders can push the market in a certain direction. This will attract other investors to buy, which will affect the price at which your order will be completed. In addition, you can sow panic among other market participants who will follow your example. When a giant drop or surge in the value of a cryptocurrency occurs, it is usually represented by a market crash.
To address such issues, we are pleased to introduce a new Iceberg order type on the exchange to address such issues. Iceberg orders are an advanced trading feature that allows you to buy or sell large amounts of cryptocurrency in your account without significantly moving the price up or down.
Let’s explore how Iceberg orders can help investors execute large orders.
Iceberg Orders explained
An iceberg order is a large buy or sell order broken down into many smaller limit orders. Each limit order represents a fraction of the total amount and is released to the market - one at a time. Once the first limit order is filled, the next in the sequence is released, and so on.
It’s a way for traders to buy or sell large amounts of cryptocurrency without drastically affecting the price. If someone wants to buy or sell 100,000 bitcoins (BTC) at once, the transaction will be highlighted in the order books. Usually, a large drop in a cryptocurrency's value leads to a market crash. Not only for the person placing the order, but all other traders as well.
That's why investors who want to execute large trades break them up into several smaller orders. When the orders are mixed in with all the other activity in the market, no one will notice a series of small transactions.
You might have already guessed that the “Iceberg” name refers to the fact that only the “tip” of the iceberg is visible above the waterline, while the rest lies beneath. You might also be aware of its other name: “reserve orders.”
Why use iceberg orders?
Investors can use an iceberg order when they want to buy or sell large amounts of cryptocurrency without disrupting the market. Iceberg trading allows you to avoid major changes in the cryptocurrency market, such as price spikes. Institutional investors' main goal in such cases is to fill all their orders at the desired price. So the last thing they need is to inflate the currency's price due to buying pressure from other investors.
Furthermore, it’s a way to reduce market panic. Based on the logistic plan, transactions are carried out in a structured manner. This helps keep the value of cryptocurrencies steady and demand for them high. The cryptocurrency executes trades until the chart is completed and the overall order is completed.
Here is an example of an iceberg order:
A client wants to sell 1000 BTC. The order is divided into several smaller parts. It begins with a sell order of 300 BTC, followed by two smaller sell orders of 200 BTC each, and finally, another sell order of 300 BTC.
Benefits of Iceberg orders
A great benefit of an Iceberg order is the fact that it reduces the price movement that could happen caused by a huge change in the market. This way, an investor can buy or sell the full amount more or less in a more stable environment. There is more to the benefits offered by Iceberg orders:
1. More structured transactions
Investors can divide the total trade amount into small orders by choosing the Iceberg order, resulting in a more structured and low-risk transaction process.
2. Prevents panic
Investors with high investments tend to attract less attention to their transactions and stay “quiet” to minimize the impact of the iceberg order on overall trading.
3. Low risk
Iceberg orders can lower the risks associated with high investments and sudden price movements.
How can Iceberg orders be identified?
Recognizing iceberg orders is difficult because when the visible part of an order is executed, the next part is almost immediately placed into the order book. All parts are approximately equal in size.
Traders can identify iceberg orders by looking for a series of “limit orders” executed by a single market participant that repeatedly reappears. Let’s say an investor placed an order to buy 10,000 ETH but has used 10 different orders with 1,000 each using the Iceberg order.
Traders must look into this pattern very closely to recognize these orders. A trader might decide to short-sell an asset due to strong selling pressure from the constant stream of limited sell orders.
How to use Iceberg orders on the PointPay exchange?
As we revealed the tricks of Iceberg orders, let's discuss how to place an Iceberg order on the PointPay exchange. Here are the steps you need to take:
- Log into your PointPay account or register if you don't have an account yet.
2. Click on “Exchange” in the main header section. For now, we will select the Advanced exchange interface.
3. After choosing a market, click on the Buy or Sell field in the upper right corner. In our example, we are planning to place a Buy order.
4. Choose the Limit order type.
5. Type in the limit price and select the amount.
6. Confirm the “Total” and tick the “Iceberg order” box.
7. Select the “Iceberg step” to determine how many orders your Iceberg order will be divided into.
8. Now press the “Buy” button to complete your order.
That's it! You can check your “Order history” to ensure your order was completed in full.
Still have doubts? Please check our detailed video guide on how to place an Iceberg order on the PointPay exchange successfully!
PointPay always strives to provide its customers with the most successful features of the industry and a wide range of services to help you maximize profits, grow your portfolio and reach your goals. An Iceberg order enables PointPay users to complete big trades in a way that minimizes their exposure while still taking advantage of the trading benefits available at the PointPay exchange.
Enjoy Iceberg orders on PointPay exchange, and stay in control of your investments in a secure and growing platform!
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