What is a Post-Only order and how does it work? A survival guide to the order book for pros

In this guide, you will see concrete examples (Bybit, Binance, Kraken) of how to enable this mode, in which situations it will become your main ally, and when it's better to disable it.

What is a Post-Only order?

Post-Only (add-only order) is a protective option for limit orders that guarantees the trader maker status and reduced trading fees. It works by the system automatically canceling the order if there is a risk of it being executed immediately against the current order book liquidity.

This is a rather tricky order type because the incentives behind it are not obvious. With this order, you tell the exchange: please don't execute it immediately. This means you don't want your order to be filled the moment it arrives.

For example, you send a buy order at 100, but by the time the order arrives, the ask might already be 100, and your order would be filled instantly. To avoid this, the trader understands that if the order is marketable – re-submit it at 99.95 or cancel it.

The goal is to remain a maker and earn exchange rebates, while takers are penalized with higher fees.

How is it different from a market order?

A market order allows you to specify the trade volume but not the exact price. For example, you can instruct the system to buy $10 worth of Bitcoin. When you press the buy button, the system goes to the market and executes the trade at the best available price at that moment, finding the cheapest seller and matching with their offer. This is a market order, and the Post-Only mode is not available for it. This is clearly shown below:

However, when you select a limit order, the option becomes available.

How exactly does Post-Only prevent mistakes?

Post-Only mode prevents potential errors. Suppose you want to place a limit order but don't want to pay the current price, setting a maximum price of 92,000. For instance, this is below the market price because other buyers are offering more. If you click to buy BTC and confirm, the order will be placed in the order book, but the trade won't happen because the price is below the market, and you can simply cancel the order.

As long as the trade hasn't occurred and the order is in the order book, you indeed have full control over it and can cancel it at any time without any consequences or fees.

Example of a critical price mistake

However, when working with limit orders, you can make a mistake. For example, if you intended to set a limit of 92,000 but mistakenly entered 920,000 by adding an extra zero, and you don't have sufficient funds in your account, then when attempting to buy, this order could be executed as a market order, leading to a trade at the wrong price. Post-Only mode protects against such situations.

Success in trading is 80% dependent on mindset and discipline. Using Post-Only forces the trader to trade more consciously, adhering to a liquidity provider strategy rather than giving in to the impulsive desire to buy right now at any price.

Example of a price close to the market

Suppose you try to place an order at 92,600. For instance, this is close to the current market price, but it's still a mistake because the limit price ends up above the market.

In such a case, the limit order effectively turns into a market order because the order price exceeds the current market price.

If Post-Only mode were turned off, when you pressed the buy button, the order would execute immediately as a market order, since the limit of 92,600 is higher than the current price of 92,500. But you intended to place a limit order, and this is clearly a mistake.

If you enable Post-Only and attempt to execute the trade, the system will not place the order, and a message will appear at the bottom:

Post-Only order canceled.

The reason is that your limit order could have been executed instantly, but thanks to the activated mode, the system cancels it, preventing immediate trading.

Thus, Post-Only prevents limit orders from being executed as market orders and avoids mistakes when the price is set too high and the order cannot be placed in the order book at lower levels.

Why does Post-Only work differently on different exchanges?

On different crypto exchanges, Post-Only works differently. This is because exchanges differ in their matching engine architecture, liquidity design, and logic for handling spread crossing.

• On Bybit, if the system determines that a limit order could be executed immediately, it is canceled.
• On BingX, Post-Only guarantees a maker fee of 0.02%. This represents a 60% saving on fees.
• On Binance, the order will be canceled if it cannot be placed as a maker.
• On BYDFi, if the buy price is higher than the market price, the system also automatically cancels the Post-Only order.
• On dYdX (v4), the order book is distributed among validators, and only finalized trades are sent to the chain. Due to this "microscopic" desynchronization between validator memory and the blockchain, a Post-Only order may behave differently than on a CEX due to network latency.

What are the disadvantages of a Post-Only order?

The 0.02% fee savings turn into 2-5% of missed profit when the price moves away without you, canceling the Post-Only order. That's why it's important to understand the mechanics of orders and use Post-Only depending on the situation.

Furthermore, combining Stop-Limit + Post-Only is technical suicide during liquidations. When the market is crashing, the stop price is triggered, a limit order is placed, but due to Post-Only, it gets instantly canceled (because it crosses the spread). The result is that the position is not closed, and you face liquidation.

Post-Only is also harmful in high-volume breakout situations. From experience, if the price is taking off and you absolutely need to enter a trade, Post-Only will get in the way, constantly canceling orders. In such cases, we switch to market orders.

Additionally, Post-Only gives a false sense of security. You might expect your order to be in the order book, but in reality, it was instantly rejected by the system upon attempted placement. Without proper monitoring of cancellation notifications, this leads to loss of control.

When to use a Post-Only order?

We've seen that Post-Only sometimes helps and sometimes hinders. The table below summarizes typical scenarios for using Post-Only orders.

In summary, Post-Only is good for controlling fees and maintaining maker status, but bad due to frequent cancellations and the loss of ability to quickly enter a move.

How is Post-Only different from other order types?

Alongside Post-Only, there are IOC, FOK, Conditional, as well as specialized orders like Reduce-Only and Pegged.

Here's a brief summary:

• IOC – executes immediately, the remainder is canceled.
• FOK – executes fully or not at all (canceled).
• Conditional – placed when a trigger price is reached.
• Reduce-Only – only reduces or closes a position.
• Pegged – automatically follows the market price.
• Discretionary – hides the allowable price execution range.

We will cover these order types in future guides. For now, let's summarize Post-Only.

Conclusion

Many fall into the trap of high volatility. During a dump or a sharp price spike, a limit order can turn into a market order faster than you can press the confirmation button. This leads to unexpectedly having to pay a taker fee, which is significantly higher than the maker fee. Post-Only solves this problem well.

However, by saving on fees, you risk missing out on favorable price moves. So, if you trade short-term impulses, Post-Only can become your enemy, depriving you of the ability to enter a trade at the right moment.

Ultimately, you have to choose between low fees and certainty of order execution.

Post-Only orders require knowledge of the settings, and the crypto market remains a volatile and dangerous place. Therefore, it's best to start with a demo account or small amounts. Happy trading! Your editor – Pavel Grachev for bytwork.com.

Disclaimer: All information provided in this article should not be considered financial advice! The article was created for educational purposes. Never invest more than you can afford to lose, and seek advice only from your personal financial advisor.