For traders who are done being inconsistent and want a real process.
Iceberg Orders
The bid only ever shows a small size. Yet far more trades there than the book ever showed. Somebody is hiding size, and it keeps reloading. Run it, compare it with size that got pulled, then call it yourself.
The idea in one minute
An iceberg order is a big limit order that only shows a small piece of itself. Every time that piece gets filled, a new piece appears at the same price.
Resting limit orders to buy are the bid, and resting limit orders to sell are the offer. Together they are the order book: what everyone is willing to trade, and at which price. Traders who use a market order are aggressive. They sell into the bid or buy from the offer. Traders who wait with a limit order are passive.
Say a buyer wants a lot of contracts at one price. If they showed all of it on the order book, everyone would see it. So they show a small piece, often the same small size every time, and reload it each time it gets taken. Only the tip is above the water. That is why it is called an iceberg.
An iceberg is one of the ways absorption happens. Sellers keep hitting the bid, the bid keeps coming back, and price will not go through. The hidden size is what takes all that selling.
A footprint splits each bar into its prices. Every row is one price. The left number is volume that traded on the bid, which means a seller hit it. The right number is volume that traded on the offer, which means a buyer lifted it. The stronger the colour behind a number, the bigger it is.
Under each bar, Δ is delta: buying minus selling for that bar.
The order book shows what is waiting to trade. The footprint shows what actually traded. When far more traded at a price than the book ever showed there, somebody kept refilling that price. That is what an iceberg looks like.
Go deeper: why hide the size at all?
A big order sitting on the book in plain sight changes how everyone else trades. Some traders step in front of it. The other side sees it and holds back, waiting for a better price. Either way, the big trader fills slower, or at a worse price.
Showing only a small piece keeps the rest out of sight. Many platforms can do the reloading automatically: the trader sets the full size and the piece to show, and every time the piece fills, the next one appears.
Run the iceberg
On the left is the order book: resting bids, the price, resting offers. On the right is what actually traded at each price, the same way a footprint shows it. Watch the bid at 6452.00, and compare the two bars under the chart: the most the book ever showed there, and what traded there.
Go deeper: one big trader, or many?
From your screen you cannot always tell one hidden order from a crowd of new buyers who keep joining the same price. One clue: an iceberg often reloads to the same size every time, because the trader set that size once.
For the read it does not matter much. Either way, far more traded at that price than the book ever showed, and price held. Somebody wanted that price, with more size than they let you see.
You also never know how big the iceberg is while it is there. It can run out, or the trader can cancel what is left. It only defends the price while it is there.
Go deeper: why does size get pulled?
Traders cancel orders all the time. The idea changed, the market moved, the risk got too big. Placing orders you intend to cancel before they trade, to push other traders around, is called spoofing, and it is illegal on US futures exchanges.
From your screen you cannot tell which one you are looking at, and you do not need to. Size that never traded never took any selling. The footprint shows you that straight away.
The tip and the iceberg
Same price, same few minutes, seen two ways. Flip between what the order book showed and what the footprint says traded.
Real or pulled?
Four levels. For each one you get the most the book ever showed there, and the footprint of what traded. Call it: a real reload, size that got pulled, or neither. Compare the two numbers first.
How I use it
I do not go looking for icebergs in the middle of nowhere. I look at the levels I marked before the session: the edges of the prior session's value area (the prices where about 70% of its volume traded), a prior high or low, a clear supply or demand zone. When price gets there, I want to know if somebody is defending it.
A reload at my level is that answer: far more trades there than the book ever showed, and the bid keeps coming back. But I do not buy the iceberg itself. It can run out, and it can be pulled. I wait for the reaction: the selling fades and price lifts off the level. That is my confirmation.
A big size sitting on the book means nothing to me until it trades. If it gets pulled and price goes through, the level is gone, and I do not argue with it.
Checkpoint
Checkpoint4 quick questions on iceberg orders
The bid at 6452.00 never shows more than 20 contracts. The footprint shows 450 sold into the bid at that price, and price holds. What is most likely going on?
The book shows 300 on the bid. As price gets close, it disappears, and the footprint shows only 12 traded there. What happened?
Where does a buyer's iceberg sit, and what does it take?
You spot a reloading bid at a level you marked before the session. What next?
Recap
- An iceberg is a big limit order that shows only a small piece and reloads it at the same price.
- The tell: far more traded at that price than the book ever showed there.
- Size that gets pulled is the opposite: big on the book, almost nothing traded there. It never defended the price.
- It only defends the price while it is there. Wait for price to react before you trust it.
Want to know which levels are worth watching for icebergs in the first place? That is auction market theory and volume profile, and it is exactly where the Mentorship starts.
Depth of Market: What the DOM Shows and What It Hides
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