Order Types of Derivatives on LeveX

LeveX provides derivative traders with a selection of four order types: limit orders, market orders, conditional orders, and post-only orders. Each order type offers unique features, allowing traders to select the method that best aligns with their individual preferences and trading objectives.

1. Limit orders

      1.1. Definition

      An order to buy or sell at a certain price is known as a limit order. It allows users to set the order price, and the order will be executed at the designated price or a more favorable one.

When a limit order is placed, it will be promptly executed at the best price available if there are already orders in the order book that match or exceed the specified order price. If there are no orders in the book that reach or exceed the designated price, the limit order will be added and will be executed, which will increase the depth of the market.

      1.2. Use cases

    Limit orders on a cryptocurrency exchange are ideal for users seeking to buy or sell at a precise, predetermined price. Here are two prevalent scenarios illustrating the utility of limit orders:

• Buying at a Lower Price: 

Example: Suppose A wants to purchase Bitcoin (BTC) but is only willing to pay $50,000 per BTC. He places a limit order to buy 1 BTC at $50,000. If the market price drops to $50,000 or below, his order will execute at his specified price, allowing him to acquire Bitcoin at her desired price point.

• Selling at a Higher Price:

Example: Consider B, who owns Ethereum (ETH) and aims to sell it once the price reaches $3,000 per ETH. He sets a limit order to sell 2 ETH at $3,000 each. When the market price climbs to $3,000 or above, his order will trigger, enabling him to sell his Ethereum at his target price.

      1.3. Set up

      Navigate to the derivatives trading page. Select [Limit], input the "Price" and "Quantity," then click either [Open Long] or [Open Short.]

2. Market orders

      2.1. Definition

     A market order is a type of order that involves rapid buying or selling at the best available market price.

     2.2. Use cases

     Market orders are generally suitable for quickly buying or selling at the current market price.

Example: Executing a Trade Immediately: Let's say A wants to enter a position in Ethereum futures contracts promptly. He places a market order to buy 2 Ethereum futures contracts. The market order ensures that his order is executed instantly at the current market price, regardless of fluctuations, enabling him to swiftly establish her position in the market.

      2.3. Set up

     Open the derivatives trading page, select [Market], input the quantity, and click [Open Long] or [Open Short].

3. Conditional orders

      3.1. Definition

   Conditional orders are automatically submitted once a specified criterion is met. To activate these orders, you need to specify a trigger price which can be based on either the Last Traded Price or the Mark Price. You also have the option to determine whether you prefer your order to be executed at a designated Limit Price or at the prevailing Market Price once your trigger price is reached. This type of order is generally used with advanced strategies by experienced traders.

      3.2. Use cases

    Conditional orders are typically used to set entry or exit prices in advance. Here are two common scenarios for using conditional orders: 

• Scenarios 1: A holds a short position in Bitcoin futures contracts and wants to protect his gains by exiting the position if the price starts to rise rapidly. A sets an exit trigger order with a trigger price of $65,000. This means that if the market price of Bitcoin futures contracts reaches $65,000 or higher, his trigger order will be activated, and he will exit his short position. If the market price of Bitcoin futures contracts rises to $65,000 or above, Bob's trigger order is triggered, and a market order is executed immediately, closing his short position at the prevailing market price.
• Scenarios 1: B is closely monitoring the price movement of Ethereum futures contracts. He believes that if the price breaks above $3,800 per contract, it will signal a bullish trend continuation, and he wants to enter a long position. B sets a trigger order with a trigger price of $3,800. This means that if the market price of Ethereum futures contracts reaches $3,800 or higher, his trigger order will be activated. Once the market price hits $3,800, his trigger order is triggered, and a market order is immediately executed, buying one Ethereum futures contract at the prevailing market price.

NOTE: 

• Last Price: Refers to the real-time executed price in the derivatives trading order book.
• Mark Price: The mark price is a mechanism introduced to prevent losses for users caused by abnormal market fluctuations on specific platforms. It is calculated by weighting price data from major exchanges, providing a fairer reflection of the real market price.
• Index Price: The Index Price is the primary component of Mark Price. It is the weighted average value of the underlying asset listed on major spot exchanges, which reflects the fair market value of the futures contract and is constantly updated to account for any changes in the asset’s spot price or the weighting of the exchanges used to calculate the index.

      3.3. Set up

     Access the derivatives trading page, choose [Conditional], input the "Price," "Price," and "Quantity," then click [Open Long] or [Open Short].

4. Post only orders

      4.1. Definition

     Post Only indicates that the order won't be instantly matched in the market, ensuring the user retains their status as a maker. If the order happens to be immediately matched with an existing one, it's automatically canceled. 

      4.2. Use cases

      Post Only orders are typically used as a means for liquidity providers to earn fee income. Below are two scenarios illustrating the common usage of Post Only orders:

• Scenario 1: A is a professional market maker specialized in Ethereum futures contracts. He aims to profit from the bid-ask spread while providing liquidity to the market. A places post-only orders to buy and sell Ethereum futures contracts slightly above and below the current market price, respectively. This ensures that his orders are added to the order book as maker orders, contributing liquidity to the market. When other traders place market orders to buy or sell Ethereum futures contracts, they match against his post-only orders, earning him fees for providing liquidity. Since his orders are post-only, he avoids the risk of immediate execution and can adjust his prices dynamically to maintain his market making strategy.
• Scenario 2: B is a liquidity provider on a cryptocurrency futures exchange. He wants to earn fees by providing liquidity to the market without incurring the risk of immediate execution. B places a post-only order to sell Bitcoin futures contracts at a slightly higher price than the current market price. By doing so, he ensures that her order will only be added to the order book as a maker order and will not execute immediately as a taker order. If the market price moves in his favor and reaches his specified price, his post-only order will be added to the order book as liquidity, allowing other traders to match against it. He earns fees for providing liquidity without the risk of immediate execution.

      4.3. Set up

     Enter the futures page, select [Post Only] - enter "Price" and "Quantity" - click "Open Long" or "Open Short".