Post-Only and Reduce-Only Orders

Post-only and reduce-only are order instructions common on crypto exchanges and many futures platforms. A post-only order is a limit order that will only rest in the order book; if it would trade immediately, it is cancelled or repriced instead. A reduce-only order can only decrease an existing position; it can never open a new one or increase your size. Both protect you from expensive or dangerous accidents.

Post-only orders#

Exchanges often charge takers, orders that trade immediately, a higher fee than makers, orders that rest and add liquidity. Some even pay makers a rebate. A post-only order guarantees you are a maker.

Why it matters#

For active traders, the difference between maker and taker fees can be larger than any other cost. Post-only enforces the cheaper side. See Commissions and Fees.

The trade off#

Post-only orders never cross the spread, so they never fill instantly. If the market moves away, you miss the trade. They suit patient entries and market making, not urgent exits.

Reduce-only orders#

On derivatives venues, especially crypto perpetual futures, you can easily flip from long to short by selling more than you own. A reduce-only order prevents that.

Where reduce-only helps#

• Stops and take profits on futures and perpetuals, especially when several exit orders exist.
• Partial exits where you want to make sure you never oversell.
• Managing positions across devices or bots, where one order might fill while another is still active.

Many exchanges also mark close position orders as reduce-only automatically. See Perpetual Futures.

Similar instructions elsewhere#

Stock brokers rarely use these exact names, but similar protections exist: bracket orders with linked exits prevent accidental reversal, and some platforms reject sell orders larger than your position in a cash account. See Bracket Orders and OCO Orders.

Common mistakes#

• Using post-only for exits that must happen, like a stop loss.
• Forgetting reduce-only on stops after taking partial profits, leaving oversized stops in the book.
• Assuming post-only orders always rest. Check whether your exchange rejects or reprices crossing orders.

Frequently asked questions#

What does post-only mean?#

It means the limit order will only be accepted if it adds liquidity to the order book; it will not execute immediately against an existing order.

What does reduce-only mean?#

It means the order can only reduce or close an existing position, never open or increase one.

Should I use reduce-only on all exit orders?#

On futures and perpetual swaps it is a sensible default for stops and take profits, because it prevents accidental new positions.

Sources#

• Wikipedia, Order (exchange)