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A post-only order, used with limit orders, ensures your order is added to the order book as a "maker" order, not executed immediately, and only charged maker fees if filled, preventing unintended taker fees and immediate execution.
Here's a more detailed explanation:
Purpose:
Post-only orders are designed to add liquidity to the market by ensuring your limit order is placed in the order book as a maker order, rather than immediately matching with an existing order as a taker.
How it works:
When you place a post-only order, the exchange will only accept it if it would be added to the order book as a maker order (meaning it would not immediately match with an existing order).
Maker vs. Taker:
Maker: A trader who adds liquidity to the market by placing orders that are not immediately executed.
Taker: A trader who removes liquidity from the market by immediately executing a trade against an existing order.
Benefits:
Lower trading fees: By ensuring your order is a maker order, you can potentially pay lower trading fees (maker fees) compared to taker fees.
Control over execution: Post-only orders give you more control over when and how your order is executed, preventing unintended immediate executions and potentially better prices.
Avoids unintended taker fees: If a post-only order would immediately execute as a taker order, it will be canceled, preventing you from paying higher taker fees.