Reduce-Only Order

Introduction to Reduce-Only Order

Reduce-only orders, which are available as an additional option to limit orders, serve to strictly reduce your position size by dynamically reducing or adjusting the contract quantity of your limit order to match the contract size of the open position. This ensures that your position is not unintentionally increased.

Main Purpose for Trading

Traders can ensure that a limit order set to take profit will not be unintentionally executed as a new position with the opposite direction if the current position has already been closed/stopped out/liquidated by selecting the Reduce-only option with their limit orders.

For Example: Trader A currently holds Buy Long 1,000 BTCUSD contracts at USD 5,000 and also sets a stop loss order at USD 4,800. In addition, Trader A also wants to set a take profit/partial take profit order with a limit price set at USD 5200. The following are 2 examples of Trader A setting a Take Profit with and without selecting the Reduce-only order option:

  • Without Reduce-only Option If the Last Traded Price triggers the order's stop-loss first and then proceeds to rise back to USD 5,200, the previous take profit limit order will likely be fulfilled, causing the trader to open an unintended Sell position at USD 5200.

  • With Reduce-only Option If the Last Traded Price triggers the order's stop-loss first, the corresponding take profit limit order at USD 5200 will automatically be canceled, thereby ensuring its non-execution to prevent future unintended opening of positions.

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