What Is the Primary Risk Associated with Using an Iceberg Order?

The primary risk of an iceberg order is "order book front-running" or "peeking." While the visible portion is small, other sophisticated traders (often HFT) can infer the true, larger size of the order by observing the pattern of the visible fills and the constant re-entry of the small chunk. Once the true size is inferred, they can trade ahead of the hidden portion, moving the price against the iceberg order and increasing the eventual slippage.