Iceberg Order
Iceberg orders are large single orders that have been divided into smaller limit orders, usually through the use of an automated program, for the purpose of hiding the actual order quantity. The term "iceberg" comes from the fact that the visible lots are just the "tip of the iceberg" given the greater number of limit orders ready to be placed. They are also sometimes referred to as reserve orders. Iceberg orders are mainly used by institutional investors to buy and sell large amounts of securities for their portfolios without tipping off the market. Only a small portion of their entire order is visible on order books at any given time. By masking large order sizes, an iceberg order reduces the price movements caused by substantial changes in a stock's supply and demand. For example, a large institutional investor may want to avoid placing a large sell order that could cause panic. A series of smaller limit sell orders may be more palatable and disguise the ext...