The MarketDelta Blog

With the availability now of our new trading software called MarketDelta Trader, iceberg orders are much more obvious. This is because the new software combines depth of market (DOM) data with a tightly integrated Footprint. This combination of the pre-trade data with post trade data shows iceberg orders more clearly.

For those who do not know much about iceberg orders, the simplest way to describe them is to simply think of a real iceberg. Only a portion of the quantity is shown in the depth of market. As the order is filled, more quantity is automatically refreshed in the order book. A simple example would be an order for 500 contracts. The trader uses an iceberg order to only show a set quantity, say 50. As the 50 are filled, another 50 are automatically, and almost instantaneously, sent into the market at the same price. This will continue to happen until the entire iceberg is filled.

The purpose for these orders it to hide the actual intent to buy or sell large quantities. This helps institutions and large traders to not be “front-run” by others who look to jump in front of their larger orders. One benefit of now being able to better track this activity, especially at key support and resistance levels, is have absolute knowledge of how much volume is trading without having to rely on the order book. Obviously the order book will not show this data without the Footprint.

A simple example of an iceberg is shown in this video. Better examples present themselves every day, but we happened to be recording the market when this occurred.

Iceberg Order from MarketDelta on Vimeo.

For more information on MarketDelta Trader or to demo the software, visit http://www.marketdelta.com/products/trader/brokers.