An iceberg order is an algorithmic order type allowing users to avoid place a large order while avoiding slippage. An iceberg order automatically breaks up a user´s large order into multiple smaller orders. These orders will be placed on the market according to the latest best bid and ask price as well as the parameters set by the user. When one of the smaller orders has completely filled, or the latest market price has deviated significantly from the price of the current order, a new order will be placed automatically.
Case 1: A user would like to buy 1,000 BTC and does not want to increase the cost so he/she place an iceberg order:
The system will automatically place an iceberg order. The amount of each order will be the single order average. The order price will be the latest buy price* (1-price variance). Once the order completely filled, a new order will be placed. When the last market price exceeds 2*(order variance), the previous order would be cancelled and a new one will be placed.
When the amount traded equals the total order amount, the iceberg trade has been filled. When the last market price exceeds the highest buy price of 20,000 US Dollars, the iceberg order would be temporarily halted.
After the price falls down to 20,000 US Dollars, the iceberg order would be recommenced.