Iceberg orders... talk to me!

[Brovashift]

Bit of Terry Tibbs there

As we've got Royal Ascot on Tuesday there's a question Ive been meaning to ask about Iceberg orders and how exactly do they work?

Ive have seen obvious iceberg orders before, only to see price break against them. Surely someone who has the capitol to keep mopping up orders on oneside of the book isn't going to just take a painful loss without a fight!

Looking at a reversed ladder and seeing an iceberg order on the lay side, Id expect price to break higher after someone with deep pockets has just accumulated a big lay bet, only to see it break lower.
I have questioned what I am seeing and thought maybe they are not accumulating lays but encouraging others to lay around this price so they can build a big back position by effectively scratching their own lay orders while simultaneously mopping up other lay orders on the back side... at the same time placing their exit orders lower down ready, before pulling the iceberg and causing the backing frenzy that ensues.

Im I close, or no cigar?

TIA

[Euler]

The best thing to do is looking for a price that is static but where pressure is building up elsewhere. When that breaks the floodgates can open.

[Brovashift]

The best thing to do is looking for a price that is static but where pressure is building up elsewhere. When that breaks the floodgates can open.

Hi Euler,

Pressure elsewhere... as in on the otherside of the book, or on another selection?

Id like to understand from the other traders perspective e.g. if I placed an iceberg order, what am I trying to do. Apart from stopping the price, how am I trying to profit?

Investopedia says;
"Traders can profit off iceberg orders by buying shares just above the price levels supported by initial batches of an iceberg orders."

But my experience is the opposite, in racing markets anyway.

[Euler]

Iceberg orders in Racing are generally an attempt to get an order filled at a specific price.

[Brovashift]

Iceberg orders in Racing are generally an attempt to get an order filled at a specific price.

OK.... let the Ascot battle commence

[Euler]

Hi Euler,

Pressure elsewhere... as in on the otherside of the book, or on another selection?

Yes, the rest of the market or another selection.

[dm1900]

True iceberg orders are not available on Betfair.

[Big Bad Barney]

True iceberg orders are not available on Betfair.

What do you mean? Presumably then false iceberg orders are? What's the difference?

[Korattt]

this is how I perceive icebergs

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[ShaunWhite]

True iceberg orders are not available on Betfair.

What do you mean? Presumably then false iceberg orders are? What's the difference?

True iceberg orders are split into visible and invisible parts, and the invisible parts become visible when the visible parts are executed. Basically to maintain your PIQ, but a Betfair "iceberg" is just drip feeding your offer at the expense of PIQ. Its only available to institutional investors and really only has a use where the exchange exposes the Level 2 order book, ie the individual orders not just the total available.

They've always been controversial but justified by citing market stability as a general benefit when it comes to shifting big positions which are being traded for benign reasons rather than any sort of panic mode.

[FattyGoLucky]

Love a bit of fonejacker

[Big Bad Barney]

True iceberg orders are split into visible and invisible parts, and the invisible parts become visible when the visible parts are executed. Basically to maintain your PIQ, but a Betfair "iceberg" is just drip feeding your offer at the expense of PIQ. Its only available to institutional investors and really only has a use where the exchange exposes the Level 2 order book, ie the individual orders not just the total available.

They've always been controversial but justified by citing market stability as a general benefit when it comes to shifting big positions which are being traded for benign reasons rather than any sort of panic mode.

Thanks Shaun, the Betfair API doesn't do level 2, correct? We only have access to our own orders and the amount available at a price.....I'm somewhat ignorant, but do big players/institutionals have other access? or are you just referring to other exchanges (financial ones or crypto)?

I suppose you could 'try' to identify a drip feeds if they were consistent amounts and timed at regular intervals...but I guess one has to spend time looking at that more closely...

[ShaunWhite]

Correct, there's no level 2 order book on Betfair for anyone. I've no idea which exchanges provide it but it's standard (or was) on the financials eg LSE etc etc. All part of the blizzard of info you have to handle on dealing systems and why nanoseconds count when you're handling that much data.