What is a Limit Order?

  • Updated

Limit orders can now be submitted through our UI, API, or smart contract. 

Limit orders use a limit price trigger for market buys or sells at a particular price, allowing you to enter or exit a position at your limit price or better. 

For example, if you're bullish on ETH and want to buy at a lower price than it's currently worth, you can submit a limit order to buy 10% lower than the current price. Once the price falls and crosses the limit price, you'll automatically buy ETH without having to manually execute the trade. 

This is different to a market order, which only lets you buy or sell immediately at the best available price. It’s important to remember that while market orders prioritize time, limit orders prioritize price

So if you want to quickly get into a position and you’re not sensitive to the price, then a market order is best. On the other hand, if you want to open a position at a certain price and you’re not sensitive to the timing, then you should use a limit order. 

The benefits to traders include:

  • Better execution and improved risk management
  • Automate your trading
  • Enable more sophisticated trading strategies

Enabling Limit Orders

To start using limit orders, there is a one-off approval that must be completed, where you must approve LimitOrderBook to open positions. 

Change order type to "Limit" and click on “Approve Limit Order” as shown below:

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After you have approved the LimitOrderBook to open positions for you, limit orders are now activated. You can start placing limit orders by going to the market you want to trade and then changing the order type to "Limit".

Placing a Limit Order

Limit orders have a minimum position requirement of $100.

Once changing the order type and choosing long or short, you can then enter your limit price in the price field and decide on the position size in the amount field (or via the buying power slider):

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The expiration of the limit order can be modified. Select from the options from the dropdown menu by clicking on the clock icon (options vary between 5 minutes and one week).

Click on “Confirm Limit Order”. The submission of the limit order is done off-chain, so you’ll just have to submit a signature from your wallet and there are no gas or trading fees when submitting limit orders.

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Once you’ve provided your signature, the order will appear under the Limit Orders tab until it is executed:

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When the mark price reaches the limit price, the order will be executed and your position will be opened. You do not pay any trading fee until the filing of your limit order.

The execution price of a limit order may differ depending on liquidity/slippage. 

There are no partial fills with advanced order types and limit orders will either be fully executed or not at all. Once a limit order has been executed it will be shown in the fills column and in your transaction history. 

Canceling a Limit Order

If you want to cancel a limit order before it has been executed, then click on "Cancel" and confirm in your wallet. As mentioned above, cancellations are done on-chain so this will carry a gas fee. 

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Reduce-only Option

There’s also a reduce-only option for limit orders, which can be used whenever you want to strictly reduce the size of an open position. For example, if you are long ETH-USD, you can use a reduce-only order to sell to make sure it only partially or fully close the existing long position.

To submit a reduce-only limit order, you must already have an existing position for a given asset.

Tick the checkbox next to "Reduce Only" on the UI before submitting the order:

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A new slider will appear. 'Buying power' is now replaced with 'position size' when using the reduce-only option, prompting you to specify the percentage of your existing position you want to close:

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Click on "Confirm Limit Order" it will be submitted. This order will only ever decrease the size of your existing position, unlike a standard limit order which will be executed once the market price reaches the limit price.

Slippage

As with market orders, limit orders will incur slippage. Depending on liquidity and market conditions, the fill price may differ slightly to the limit price.