Iceberg order

Iceberg order is a large order which has been divided into smaller orders, usually by the use of an automated program, for the purpose of hiding the actual order quantity.

After you create your 'Trading Action Plan', based on your own technical or fundamental research, next step you are going to take is, placing your order with your broker. Before you can start buying and selling stocks, you must know the different types of orders. You must be aware as to which order is appropriate and its implications.

What is an Iceberg Order?

Iceberg order is a conditional request made to the broker (or the system) to buy or sell a large required quantity of stock, but in smaller predetermined quantity.

A buy or sell order for a large quantity of shares is placed, with the “Disclosed Quantity” for a small quantity of shares.

A small quantity order is shown to the public as the tip of the iceberg, while a large quantity order stays hidden like the body of the iceberg.

This usually done by the automated program. What ever quantity is disclosed will be available for order matching. Once that quantity is traded a second similar quantity is available for trade matching, until the full quantity is completely traded.

In the absence of the automated program, several orders have to be separately keyed in.

When to use an Iceberg Order?

Iceberg orders are usually used by big investors or Institutional investors.

When a very big order is visible it will affect, at least temporarily, the supply and demand of the market. To nullify such an effect, a small quantity is disclosed to the public against a large order.

So large investors, place their mammoth order which is undisclosed and a divided smaller lot is disclosed.

A series of orders for the disclosed quantity is released to the system as and when each order gets executed.

This avoids the sudden movement in the market caused by the large order.

Compare Iceberg order with other types of stock market orders.

  • All or None Order
  • It is a conditional request made to the broker (or the system) to buy or sell a required number of shares at particular price, only if full quantity of shares are available.
  • GTC Order
  • It is a conditional request made to the broker (or the system) to keep the order in system until it gets executed or canceled.
  • GTD Order
  • It is a conditional request made to the broker (or the system) to keep the order in system until it gets executed or till a predetermined date.
  • IOC Order
  • Immediate or Cancel is a conditional request made to the broker (or the system) to execute the transactions immediately or to cancel it.
  • Limit Order
  • Limit Trading Order is a conditional request made to the broker (or the system) to buy or sell a stock at a particular price or at a better price.
  • Market Order
  • Order to buy or sell at market is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price.
  • Stop Loss Order
  • Order at stop is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price, once the price crosses a predetermined trigger price.
  • Stop Limit Order
  • Order at stop limit is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price, once the price crosses a predetermined trigger price but with in a predetermined limit price.
  • Minimum Fill Order
  • This is a conditional request made to the broker (or the system) to execute the transactions only when a minimum number of shares are available.
  • One Cancels Other Order
  • This is a conditional request made to the broker (or the system) to execute one of the two orders, which ever meets the required parameter first, and cancel the other.
  • Market on Close Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at the closing price.
  • Limit on Close Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at the closing price but with in a limit price.
  • Market on Open Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market opening price.
  • Limit on Open Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market opening price but with in a predetermined limit price.
  • Market If Touched Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market price only after the stock trades at particular predetermined price.
  • Fill or Kill Order
  • This is a conditional request made to the broker (or the system) to execute the transactions only if the full quantity of shares are available, or else to cancel the order.






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