What is Post Only? The Complete Guide to Cryptocurrency Order Strategies | Market vs. Limit Orders Full Comparison

When trading cryptocurrencies, do you often find yourself confused about whether to choose a market order or a limit order? Or have you heard the professional term “Post Only” but not quite understood what it means? This article will provide an in-depth analysis of these key order types to help you make smarter trading decisions based on different market situations. Whether you’re a beginner just entering the crypto space or an advanced trader looking to optimize your strategies, this comprehensive guide will help you grasp the core principles of order placement.

Market Orders for Quick Execution, Limit Orders for Precise Price Control | Basic Concepts of Orders

Market Orders: Immediate Execution at the Best Available Price

A market order is an instruction to buy or sell cryptocurrency immediately at the best available current market price. In other words, when you place a market order, the trading platform will execute it promptly at the current market price, without waiting.

Three main advantages of market orders:

• Immediate execution: The order is filled instantly, allowing you to enter the market quickly and not miss trading opportunities.
• Guaranteed fill (high probability): Since the order is executed at the current market price, the likelihood of it being filled is very high (though not 100% guaranteed).
• Simple operation: Compared to limit orders, placing a market order is straightforward and does not require setting a specific price.

However, market orders also have three notable drawbacks:

• Slippage risk: The execution price may be worse than expected due to price movement during the transaction.
• Price control is weak: Cryptocurrency prices fluctuate constantly, so you have limited control over the final execution price.
• Higher fees: Exchanges often charge higher fees for market orders because they remove liquidity from the market immediately.

Example: If the current market price is $100, placing a $100 market buy order will typically execute around $100, but in volatile conditions, it might fill at $101 or $99.

Limit Orders: Full Control Over Your Entry Price

A limit order allows you to specify a particular price or better at which you are willing to buy or sell. Unlike market orders, limit orders give you complete control over the execution price, making them the preferred choice for traders who want precise entry points.

Three main advantages of limit orders:

• Precise price control: You set your ideal transaction price in advance, avoiding forced execution at unfavorable prices.
• Minimized volatility risk: By setting your desired price, you can effectively avoid losses caused by market swings. If the price moves against your expectation, you can prevent unfavorable fills.
• High strategic accuracy: You can set limit orders based on support or resistance levels and other technical analysis, increasing the likelihood of successful trades.

But limit orders also have three clear disadvantages:

• Missed opportunities: Part of your funds may be locked in pending orders, causing you to miss potential trades.
• Decision complexity: Limit orders require technical analysis to determine your entry price, which can be challenging for beginners.
• Unfilled orders: If the market price does not reach your set level, your limit order may never execute, causing you to miss the trade.

Buy order example: When the market price is $100, setting a limit buy order at $80 will keep it pending until the price drops to $80.

Sell order example: When the market price is $100, setting a limit sell order at $120 will remain pending until the price rises to $120.

Advanced Limit Orders Deep Dive: How Post Only Can Reduce Fees?

Once you’re familiar with basic order types, advanced options provided by exchanges open new strategic possibilities. These advanced limit orders include specific conditions that give you more flexible control over trading methods and costs.

Post Only: Only as a Maker, Enjoy Lower Fees

What is Post Only?

Post Only is a special setting for limit orders that requires your order to enter the order book as a “maker” (liquidity provider), rather than executing immediately against existing orders. In other words, a Post Only order will be rejected if it would match immediately with an existing order, ensuring it only adds liquidity to the market.

This might sound complicated, but essentially, Post Only means: “I only want to place an order that does not execute immediately.”

Practical scenarios for Post Only:

Suppose the current market price is $100:

• You place a Post Only buy order at $110. Since $110 is above the current price, your order will enter the order book and wait, not execute immediately. By doing so, you act as a market maker, increasing liquidity, and the exchange may reward you with lower fees.
• If there is already an existing order at $110, your Post Only buy order will be canceled because it would match immediately, violating the “no immediate execution” rule.

Advantages and risks of Post Only:

The biggest benefit is lower trading fees. As a market maker increasing liquidity, exchanges often offer discounted rates. This is especially advantageous for high-frequency or large-volume traders.

Another hidden benefit is price protection: Post Only orders cannot be executed at unfavorable prices, ensuring you only trade at your desired levels.

However, there are risks: in fast-moving markets, your Post Only order might never execute, causing you to miss opportunities.

FOK (Fill or Kill): All-or-Nothing Immediate Execution

A FOK order requires the entire order to be filled immediately; if it cannot be fully executed, the entire order is canceled.

FOK example:

If the current market price is $100, and the lowest sell orders are at $101 with a total volume of 10 units:

• Placing a FOK buy order at $101 for 10 units will execute immediately if available.
• If you try to buy 11 units at $101, the order will be canceled entirely because it cannot be fully filled.

IOC (Immediate or Cancel): Partial Fills Allowed

An IOC order allows partial execution. It will execute as much as possible immediately, and any unfilled portion will be canceled automatically.

IOC example:

In the same market environment (sell orders at $101, volume 10):

• A buy IOC order for 10 units at $101 will fill all 10 units immediately.
• A buy IOC order for 30 units at $101 will fill 10 units immediately, and the remaining 20 units will be canceled.

Practical Order Selection Guide | Choosing Based on Market Conditions

In real trading, the choice of order type should be flexible and based on your trading style and current market conditions.

During Highly Volatile Markets: Prefer Limit Orders

In turbulent markets with rapid price swings, limit orders are wiser. They allow you to set your desired price and avoid executing at unfavorable levels. For example, if prices suddenly move against you, a limit order can prevent losses that might occur with a market order.

For Quick Entry and Long-Term Holding: Market Orders Are Suitable

If your goal is to quickly open a position and hold long-term, market orders are more appropriate. The priority is to seize market opportunities rather than getting the best price. Although you might encounter slippage, the eventual price rebound could offset initial losses.

To Minimize Fees: Post Only Is the First Choice

If you trade frequently or in large volumes, Post Only orders can significantly reduce your trading costs. By acting as a market maker, you benefit from discounted fees and better control over your entry price.

Ensuring Certain Volume: FOK or IOC Have Their Uses

• FOK: Suitable when you need to fill your entire order at once, such as hedging or precise position balancing.
• IOC: Useful when partial fills are acceptable, and you want to execute as much as possible immediately, like quick entries or exits.

Common Questions for Beginners

Which is better: market order or limit order?

There’s no absolute answer. Market orders guarantee quick execution, ideal when you need to enter immediately. Limit orders give you full control over the price, suitable for precise entries. Choose based on your trading goals, risk tolerance, and current market conditions.

Are market orders riskier than limit orders?

Different risks apply rather than one being inherently riskier. Market orders face slippage risk—the actual fill price may be worse than expected. Limit orders risk not being filled at all, especially in illiquid markets or if the price doesn’t reach your set level. Understanding these risks helps you choose appropriately.

How to set Post Only orders?

Most trading platforms have an advanced order option where you can select “Post Only” or “Maker Only.” Then, set your desired order price. The platform will ensure your order only enters the order book without executing immediately.

How to decide which order type to use?

First, understand the mechanisms and pros/cons of each type. Then, evaluate your trading style: do you prioritize speed or price precision? What’s your risk appetite? Finally, test and adjust your approach through practice to find what works best for you.

Summary

Market orders, limit orders, and advanced options like Post Only are fundamental tools in cryptocurrency trading. Mastering their differences and appropriate applications can help you develop more effective trading plans and improve your success rate.

Regardless of the order type you choose, remember the most important principles: only trade with funds you’re willing to lose, and always employ basic risk management tools like stop-loss orders. Advanced orders like Post Only can help optimize costs, but sound risk management remains the key to long-term profitability.