An Iceberg order is a type of order that is designed to hide the total size of an order from the market. It is a technique used by large institutional investors who want to buy or sell a significant amount of securities without affecting the market price of those securities.

What is Iceberg order in Zerodha? 

An Iceberg order is a type of hidden order in Zerodha, where the entire order is not visible on the market. It is a larger order that is divided into smaller orders and placed at different times to avoid displaying the actual volume of shares being traded. With an Iceberg order, only a small portion of the order is displayed on the market at a time, while the rest remains hidden. This helps large traders execute their trades without revealing their real intent or causing significant price disruption. In Zerodha, traders can place Iceberg orders through the advanced trading software or by reaching out to their broker.

The hidden part of the order is referred to as the "reserve" quantity, and it can be any size the trader wishes to keep hidden. This feature allows institutional investors to purchase or sell large quantities of securities without pitching off other market participants.

For example, let's say an institutional investor wants to buy 100,000 shares of a stock but does not want to affect the market price. Instead of placing a buy order for 100,000 shares, the investor can place an Iceberg order for 1,000. Once the 1,000 share order is executed, a new visible order for another 1,000 shares will be placed, and the process will continue until the full 100,000 share order is completed.

By using an Iceberg order, the institutional investor can buy or sell large quantities of securities without significantly impacting the market price, while still maintaining the confidentiality of the overall order size.

Traders can place Iceberg orders using the Kite trading platform in Zerodha. They can set the visible order quantity and the reserve quantity, and the platform will automatically place new visible orders as the existing ones are executed.

It is important to note that Iceberg orders are only helpful for traders dealing with large quantities of securities. For small investors, there is no need to use an Iceberg order as it is not necessary to conceal their trades from the market.

Conclusion

Iceberg orders are useful for institutional investors who need to buy or sell large quantities of securities without impacting the market price. Zerodha's implementation of Iceberg orders makes it easy for traders to use this technique, and the Kite trading platform provides a user-friendly interface for placing and managing Iceberg orders.

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