Lesson on the order book and iceberg orders.

The order book is a useful but dangerous tool; one should not trust it and should not try to predict movements by observing it. It helps to understand the current situation and that's it. Some enormous orders pop up from nowhere and seem like impossible walls to overcome, convincing you that the price will never pass, but then they vanish in an instant. They are just there to influence others and make them believe there is a solid barrier.

You need to see how long those levels last: if an order remains there even when the price approaches, it might be real; if it disappears as soon as things move, then it was fake. Another thing to keep an eye on is how the price reacts when it touches certain levels. If it hits a level and bounces back sharply, there is really someone buying or selling. If, on the other hand, the price passes through as if it did not exist, those volumes were just there to make an "impression."

And don't be fooled by books that seem empty, because big traders use iceberg orders. With an iceberg order, you only show part of what you are selling or buying; as soon as that part is traded, another part of the iceberg replaces it. For example: you want to sell 1000 $ETH .. a considerable sum; placing a normal limit order would show everyone that you are selling a lot of eth at that price, discouraging buyers or pushing sellers to surpass your selling price to sell before you.

So, split the amount into 10 transactions of 100 eth; as soon as 100 are sold, the iceberg order puts another 100 up for sale.

Of course, a whale can also place 10 iceberg orders of 100 that sell 10 eth at a time, maybe spreading them a little in the order book. By doing so, you practically don't notice a sales wall, but it will be noticed only by the fact that the price continues to stop at those levels, and the traded volumes will be much higher than those shown in the order book.

If you have little funds, it doesn't make sense to use iceberg orders, but it is useful to understand how they work.

See you next time