Hidden and Iceberg Orders in Modern Order Books

An iceberg order displays only a fraction of its size, and the hidden reserve typically loses time priority every time it refreshes.

An iceberg order, also called a reserve order, displays only a small visible slice of its total size in the limit order book while holding the remainder back, invisible to anyone reading the public quote. The purpose is straightforward: a trader working a large position does not want to reveal the full size, since a visible large order invites other participants to trade ahead of it or adjust their own quotes around it.

A trader placing an iceberg order specifies a total size and a display quantity, and the exchange shows only the display quantity in the public book. When that displayed slice trades fully, the system automatically refreshes a new slice of the same display size from the remaining reserve, up to the total original size.

The displayed slice behaves exactly like any other visible limit order while it is showing. It holds ordinary time priority against other displayed orders at the same price, and it can be seen, and traded against, by anyone looking at the book.

The display quantity is chosen by the trader placing the order and can be set as a fixed number of shares or, on some venues, as a percentage of the total order, with the exchange enforcing a minimum display size so that an order cannot be made effectively invisible while still counting as a displayed order.

At most venues, each newly displayed slice from an iceberg's reserve receives a fresh timestamp when it refreshes, which places it behind every other displayed order already resting at that price, including orders that arrived after the iceberg's previous slice but before the refresh. This is the direct trade-off of using a reserve order: concealment of total size costs priority every time the reserve has to show a new slice.