Besides Iceberg Orders, What Other Order Types (E.g. TWAP, VWAP) Are Used to Minimize Slippage in Derivatives Trading? ▴ Learn

Besides Iceberg Orders, What Other Order Types (E.g. TWAP, VWAP) Are Used to Minimize Slippage in Derivatives Trading?

Besides icebergs, traders use algorithmic orders like Time-Weighted Average Price (TWAP) and Volume-Weighted Average Price (VWAP). A TWAP order breaks up a large order into smaller pieces that are executed at regular intervals over a specified time period to minimize market impact.

A VWAP order attempts to execute the order at or near the volume-weighted average price for the day. Both strategies are designed to participate with the market over time rather than demanding immediate liquidity, which reduces the price pressure and thus minimizes slippage.

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