Iceberg Order: Definition, Example and How Exchanges Handle It
A large limit order that shows only its tip in the order book. How the Toronto Stock Exchange and Nasdaq define it, a worked example, the queue priority it gives up at every refill, and how it shows up on the tape.
On this page
An iceberg order is a large limit order that shows only a small part of its size in the order book and keeps the rest hidden. Each time the visible part trades, the exchange refills it from the hidden part, until the whole order is done or canceled. Traders use it to buy or sell a large quantity without showing the full size to the market. Exchanges document the mechanics precisely, including a cost the trader accepts: each refill goes to the back of the queue at its price.
What the order book shows of an iceberg order
What is an iceberg order? The exchange definitions
The Toronto Stock Exchange puts it plainly: "An iceberg order is an order containing both hidden and displayed liquidity." The trader chooses how much to disclose, "as few as 100 shares or 1 board lot", and the system refills the displayed quantity "repeating as necessary until the entire balance is traded". TSX presents icebergs as a way to increase book liquidity and decrease price volatility; that is the exchange's description of the feature, not a measured result.
The same page sets the order in which the hidden part trades: all the shares of the order "are eligible to trade at any time after all other disclosed volume at the same price". A seller who hits the bid with a large order first takes every displayed share at that price, the iceberg's tip included, and only then reaches the hidden reserve.
Nasdaq calls the same feature reserve size. As described in the SEC order approving a 2021 rule change, reserve size "permits a participant to stipulate that an order type that is displayed may have its displayed size replenished from additional non-displayed size".
Iceberg order example
The cost: every refill loses its place in the queue
Orders at the same price are filled in time order. Both exchanges say a refill is treated as a new order for that purpose. TSX: "When an Iceberg order refreshes, it receives a new time-stamp, allowing other same-price orders an opportunity to move up in the time queue." Nasdaq: when the displayed size falls below a normal unit of trading, "a new displayed order will be entered and receive a new timestamp". Hiding size therefore costs priority: an order displayed in full would keep its place, while an iceberg waits behind every order that arrived at the same price before its latest refill.
An iceberg refill goes to the back of the line
The Nasdaq text is precise about which part is renewed: when the displayed order is replaced, the new displayed order receives a new timestamp, "while the size of the non-displayed order will be reduced by the same amount and will not receive a new timestamp". Only the visible slice goes to the back of the line each time; the reserve itself is not re-entered.
How to spot an iceberg order
The hidden part never appears in the book, so an iceberg shows up only through its trades. One sign is a price level where the traded volume keeps exceeding the quantity that was displayed: the bid shows 1,000 shares, 20,000 trade there, and the bid still shows 1,000. With the fund in the example above, that is 20 refills into an order of 500,000 shares.
What the bid shows and what trades at $20.00, refill after refill
- Shown at the bid
- Traded so far
Seeing it requires the order book and the time and sales together, as described on depth of market and level 2 stock data. An iceberg tells you that someone is working size at a price; it does not tell you who, how much is left, or whether the order will be canceled before it fills.
Iceberg orders and other order types
An iceberg is a limit order with a display instruction: it sets a price, and it can rest in the book like any limit order. The full set of order instructions is compared on order types.
More definitions are in trading concepts.
Frequently asked questions
What is an iceberg order?
A limit order that displays only part of its quantity in the order book; the hidden rest refills the displayed part each time it trades, until the order is filled or canceled.
What does iceberg mean in trading?
It names the order's shape: like an iceberg, most of the size is under the surface. Nasdaq calls the same feature reserve size.
Can you see iceberg orders?
Not directly: the hidden part never appears in the book. You can infer one when the volume traded at a price keeps exceeding the size displayed there, using the order book and the time and sales together.
Why use an iceberg order?
To work a large order without showing its full size. The trade-off, documented by TSX and Nasdaq, is that each refill gets a new timestamp and loses its place in the queue at that price.
Are iceberg orders legal?
Yes, exchanges offer them as an order feature. What is unlawful is spoofing: placing orders with the intent to cancel them before execution.
Sources
Passionate about finance, quantitative trading and data analysis. Amaury built the PatternsWizard test bench, which detects each pattern on full price history and measures what happened next against random entries.
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