Ahoy, Pro traders! We’re pleased to announce the release of Iceberg Orders on Kraken Pro, now available on all spot and margin markets through the Kraken Pro web interface.
This powerful trading tool is designed for those occasions when openly revealing the size of your trades might move the market away from you. Iceberg Orders allow you to be active in the market – with Size – without tipping your hand to other market participants.
What are Iceberg Orders?
Iceberg Orders, as the name suggests, show only a fraction of their whole size in the order book. They are particularly effective for traders looking to execute large trades without openly advertising their potentially market-moving size.
How do Iceberg Orders work on Kraken Pro?
Using Iceberg Orders on Kraken Pro involves setting two main parameters besides the limit price:
Display Quantity: This is the portion of the order that is visible to the market. You have complete control over setting this size, which represents the amount of your order that will be displayed in the order book.
Order Quantity: This is the total amount of your order, the amount you are actually trying to buy or sell.
When you place an Iceberg Order, only the display quantity is visible in the order book. The display quantity remains the same even as the order is filled in larger amounts than that display quantity shows – until your entire order quantity is filled.
Example and use case
Imagine the current price of ETH is $2,000 and you want to purchase 10 ETH. Placing a single, large order at once might cause a significant spike in the price. By utilizing an Iceberg Order with a display size of 1 ETH and a total quantity of 10 ETH, a bid of only 1 ETH at $2,000 is visible in the order book.
As your 10 ETH order is filled in increments of 1 ETH, the 1 ETH display size remains the same for each “order,” until the final 1 ETH from your hidden portion is filled. Once this happens, your entire order has been executed in full.
Potential advantages for large and institutional investors
For clients who trade in size, Iceberg Orders on Kraken Pro offer a wealth of potential strategic benefits:
Market Stability: By only revealing a fraction of your order, you minimize potential market impact. This is crucial when dealing with large sums.
Stealth: The full scope of your orders will be more difficult to discern in an effort to protect your trading strategy.
Improved Execution Prices: By reducing market impact, you can potentially achieve better average execution prices for your orders.
Position Accumulation: Iceberg Orders allow for gradual accumulation or offloading of positions. A trading strategy that can be useful for investors looking to build large positions over time without alerting the market.
Increased Flexibility: Large investors can adjust their display size and total quantity based on the market conditions, providing dynamic control over the order execution.