Iceberg Orders are large orders, which are disguised by dividing into smaller limit orders. This is done in order to hide the large size of the actual order quantity. It is typically used by institutional investors and ‘Whales’ who want to avoid tipping the market about their buy or sell decisions. This is because their decisions can influence the behavior of other traders (herding effect) due to the substantial changes the order may have over market supply and demand.

Pros: Reduce price movements and ability to group several smaller orders for large order executions.

Cons: Can be spotted by high frequency algorithms or experienced traders. Can act as resistance/support level signal for traders using technical analysis methods.