Do you want to know about Zerodha Iceberg Order? and Zerodha Iceberg orders validity?
What is Zerodha’s Iceberg Orders and It’s Orders Validity?
Iceberg is a request type that divides larger requests into smaller orders, with each small request, or leg, being sent off the trade only after the previous request has been completed.
Despite not revealing large orders in the market depth bids and offers, this lowers the effect cost of execution. Icebergs are a popular request type among institutional dealers, and we’re excited to provide it to Indian retail merchants.
How do Icebergs function works?
When a large request is made, it is divided into smaller orders or legs, and just the first leg is published on the trade from the beginning, showing only a sliver of something bigger. When this leg of the fundamental request is completed, the next leg is set, and so on, until the optimum amount is traded. The customer chooses the number of legs to be used.
What is Impact cost on Iceberg Orders?
The impact cost is the difference between the actual traded price and the instrument’s price at the time the order was made. If a market order to acquire 1000 shares was placed when the stock was trading at Rs.100 and the actual execution price was Rs.100.5, the impact cost for the order would be 0.5 x 1000 = Rs.500.
Similarly, if a limit order to buy 1000 shares was placed at 100 when the stock was trading at 100 and later changed to 100.3 to get a fill, the impact cost is 0.3 x 1000 = 300.
The effect cost increases in tandem with the amount of the order. Traders that place huge orders lose a lot more money due to impact expenses than they do from all other charges combined (STT, Brokerage, exchange transaction, etc).
How do Icebergs work?
When a large order is placed, it is split into smaller orders or legs, with only the first leg being placed on the exchange at first, displaying only the tip of the iceberg. The next leg of the main order is placed after this leg is completed, and so on until the desired quantity is traded. The customer chooses the number of legs.
Steps to place an Iceberg order on Zerodha
Step 1: On the order window, select Iceberg.
Step 2: Choose between Intraday and Overnight.
Step 3: Fill in the Quantity and Price fields.
Step 4: Choose between Market and Limit.
Step 5: Click on Buy or Sell after entering the number of legs.
Step 6: Each Iceberg can have a maximum of ten legs.
Icebergs Order to overcome freeze limits
For equities derivative contracts, exchanges have set a maximum order limit. See the Quantity Freeze Limits section for more information. The maximum number of lots in a single Nifty order is 36 (1800 Qty), while the maximum number of lots in a single Bank Nifty order is 48. (1200 Qty).
Traders who want to execute larger orders will have to submit multiple orders, which is inconvenient. An order to buy 10000 or 200 lots of Nifty or more can be placed at the same time using Iceberg orders. This will not only remove the need for several orders in the event of a large order, but it will also cut impact costs.
Order validity in minutes
Zerodha is adding a new minute validity option to its DAY (valid for the entire trading day till filled) and IOC (Immediate or Cancel) orders. An order can be set to cancel automatically if it does not complete within a certain amount of time, which is measured in minutes. Iceberg orders are valid for minutes and can be placed alongside regular orders.