Large orders that are divided into lots or modest limit orders are referred to as iceberg orders. They are divided into visible and hidden components, with the former becoming visible after the execution of the former kind of order.
Large institutional investors generally place them in order to avoid upsetting the balance of the market with a single, big order. By purchasing shares just above the price levels maintained by the initial batches of an iceberg order, traders can profit from iceberg orders.
Since there are more limit orders available to be made, the displayed lots are only the “tip of the iceberg,” hence the name “iceberg.” They are moreover occasionally known as reserve orders.
