Hi guys, I have a question about what excatly does 'HIDDEN ORDER' in Interactive Brokers does. I normally buy 10 contracts but use 'ICE BERG'. I hid 9 contracts and show only 1 contract and I place a limit order and negotiate with them. *** Now I found out there is 'HIDDEN ORDER'. What does it do? I mean if I hid all 10 contracts, how will I ever get filled when there is no trace of my 10 contracts? Please enlighten me. Thanks.
What a broker might do with a hidden order, if you want to buy 10: They will show one on the bid. When that gets filled, they will show another and so on. Your order goes to the exchange one contract at a time.
Hi trader225, thanks alot for your answer Ok so bascially hidden order is summitting one contract at a time to the exchange but what is the main purpose of doing that?
Both hidden and reserve orders, if supported natively (bright green status), will rest on the exchange's order book. Any contra order will be executed against it. A hidden order is almost the same as a reserve order with the quantity shown as zero. I say "almost" a reserve order, because as part of it is visible, it may on certain exchanges receive priority, and in the case of NMS equities, receive NMS trade-through protection (well, in 2 wks anyway when that starts phasing in).
See rayl's answer about exchange native support for hidden orders, too, but if they're not supported by the exchange a hidden order has to be simulated by the broker. One way the broker could simulate it is to just show one at the exchange. When that one gets hit, show another and so on. By doing that the broker never shows the full size of the order.
why for god's sake use something like iceberg or hidden order for a 10 lot, it's not going to help you, on the contrary, it's probably counterproductive. It's not like you're moving the market is it ? When I was trading options I was much more interested in trading 10-50 lots, even 100 lots at times than trading 1 lot from a theoretical price perspective.