Post-Only Orders: Minimizing Taker Fees on Exchanges.

___

1. Post-Only Orders: Minimizing Taker Fees on Exchanges

Introduction

For newcomers to the world of cryptocurrency trading, understanding the nuances of order types and associated fees can be daunting. While simply buying and selling crypto seems straightforward, the intricacies of exchange mechanics can significantly impact profitability. One powerful technique to reduce costs, especially for active traders, is utilizing “post-only” orders. This article will delve into the concept of post-only orders, explaining how they work, the benefits they offer, and how to implement them on popular exchanges like Binance and Bybit. We will also highlight key considerations for beginners to maximize their trading efficiency and minimize unnecessary fees. A solid understanding of exchange navigation, as detailed in A Beginner's Guide to Navigating Cryptocurrency Exchanges with Confidence, is crucial before implementing these strategies.

Understanding Market and Limit Orders: The Foundation

Before diving into post-only orders, let’s quickly review the two primary order types:

**Market Orders:** These orders are executed *immediately* at the best available price in the order book. They guarantee execution but offer no price control. Because you are *taking* liquidity from the market, you pay a “taker” fee.
**Limit Orders:** These orders allow you to specify the price at which you are willing to buy or sell. They are only executed if the market reaches your specified price. Limit orders *provide* liquidity to the market and typically incur a lower “maker” fee.

The difference between "taker" and "maker" fees is central to understanding the benefits of post-only orders. Taker fees are generally higher because you're immediately impacting the market, while maker fees are lower as you’re contributing to liquidity.

What are Post-Only Orders?

A post-only order is a type of limit order with a crucial restriction: it is designed to *never* be executed as a market order. The exchange will only accept the order if it can be placed on the order book as a limit order. If the order would be filled immediately as a market order due to price slippage or aggressive order placement, the exchange will *cancel* the order instead of executing it as a taker.

This seemingly subtle difference is powerful. It ensures you consistently pay the lower “maker” fee, regardless of market conditions. This is particularly useful for strategies like grid trading or any approach involving frequent order placement.

The Benefits of Using Post-Only Orders

**Reduced Fees:** The primary benefit is consistently paying lower maker fees instead of higher taker fees. This can significantly boost profitability, especially for high-frequency traders.
**Price Control:** Like standard limit orders, post-only orders allow you to specify your desired entry or exit price.
**Avoidance of Slippage:** Because the order is only executed at your specified price (or better), it helps avoid unexpected price movements (slippage) that can occur with market orders.
**Strategic Order Placement:** Post-only orders encourage a more deliberate and strategic approach to order placement, as you are forced to consider the order book and potential price impact.

How Post-Only Orders Work in Practice

Let’s illustrate with an example:

Assume Bitcoin (BTC) is trading at $65,000. You want to buy 1 BTC.

**Market Order:** You click “buy” and immediately purchase 1 BTC at, say, $65,000.05 (due to slippage). You pay the taker fee.
**Limit Order (Standard):** You place a limit order to buy 1 BTC at $64,990. If the price drops to $64,990, your order is filled. If the price doesn’t drop, your order remains open. You pay the maker fee if filled.
**Post-Only Order:** You place a limit order to buy 1 BTC at $64,990 with the “post-only” setting enabled. If the price *immediately* jumps to $65,000, the exchange will *cancel* your order instead of executing it as a taker order at the higher price. You pay no fee because the order wasn’t executed. You would need to re-submit the order.

The key takeaway is the cancellation mechanism. This prevents accidental taker fees when market conditions are unfavorable.

Post-Only Orders on Popular Exchanges

Let's examine how to implement post-only orders on Binance and Bybit:

- Binance**

**Availability:** Post-only orders are available on Binance Futures and Spot markets.
**Interface:** When placing an order, you’ll find a “Post Only” checkbox or toggle within the order settings. Ensure this is checked *before* submitting your order.
**Advanced Order Types:** Binance offers a variety of advanced order types, including Conditional Orders, which can be combined with post-only orders for sophisticated trading strategies.
**Fee Structure:** Binance employs a tiered fee structure based on 30-day trading volume and BNB holdings. Maker fees are significantly lower than taker fees.
**Considerations:** Binance’s order book depth can sometimes lead to post-only orders being filled quickly, even at slightly higher prices. Monitor your orders closely.

- Bybit**

**Availability:** Bybit offers post-only orders on Futures and Spot markets.
**Interface:** Bybit’s interface is generally considered more streamlined. The “Post Only” option is clearly visible within the order placement window.
**Order Types:** Bybit provides features like "Track Margin" and "Reduce Only" orders alongside post-only orders.
**Fee Structure:** Bybit also has a tiered fee structure, with maker fees lower than taker fees. They often run promotions offering reduced maker fees.
**Considerations:** Bybit’s order book may be less liquid than Binance’s for certain trading pairs, potentially increasing the chance of order cancellation.

- Comparison Table: Post-Only Order Implementation**

Exchange	Availability	Interface Location	Key Considerations
Binance	Futures & Spot	Order Settings - "Post Only" checkbox	High order book depth; monitor for quick fills.		Bybit	Futures & Spot	Order Placement Window - "Post Only" toggle	Potentially lower liquidity; increased cancellation risk.

Beginner Prioritization: Key Considerations

For beginners, implementing post-only orders effectively requires a thoughtful approach:

**Start Small:** Don’t immediately switch all your orders to post-only. Begin with small positions to understand how the system works and to avoid unexpected cancellations.
**Understand Slippage:** Slippage is the difference between the expected price of a trade and the actual price at which it’s executed. Post-only orders help *mitigate* slippage, but don't eliminate it entirely.
**Monitor Order Cancellations:** Pay close attention to orders that are being cancelled. This indicates that your price is too aggressive or the market is moving too quickly. Adjust your limit price accordingly.
**Consider Market Volatility:** During periods of high volatility, post-only orders are more likely to be cancelled. Be prepared to adjust your strategy or consider using market orders if immediate execution is crucial. Understanding how exchanges manage extreme volatility, as explained in Crypto Futures Circuit Breakers: How Exchanges Halt Trading During Extreme Volatility to Prevent Market Crashes, is also important.
**Fee Structure Awareness:** Always be aware of the specific fee structure of the exchange you are using. Understanding how your trading volume impacts your fees is essential for maximizing profitability.
**Practice on Testnet:** Many exchanges offer a testnet environment where you can practice trading with virtual funds. Utilize this to experiment with post-only orders without risking real capital.
**Combine with Stop-Loss Orders:** Always use stop-loss orders in conjunction with post-only orders to limit potential losses.

Advanced Strategies & Considerations

**Combining with Conditional Orders:** Exchanges like Binance allow you to create conditional orders that trigger based on specific market conditions. Combining post-only orders with conditional orders can automate sophisticated trading strategies.
**API Trading:** For advanced traders, using an API (Application Programming Interface) allows for programmatic order placement and management, making it easier to implement post-only order strategies at scale.
**Order Book Analysis:** A deep understanding of the order book is crucial for effectively placing post-only orders. Analyzing the bid-ask spread and order volume can help you identify optimal price levels.
**Tax Implications:** Be mindful of the tax implications of frequent trading and the resulting capital gains or losses. Consult with a tax professional for guidance.

Conclusion

Post-only orders are a valuable tool for cryptocurrency traders looking to minimize fees and improve their trading efficiency. While they require a bit of understanding and careful implementation, the potential benefits – particularly for active traders – are significant. By prioritizing a gradual learning curve, understanding exchange-specific features, and combining post-only orders with sound risk management practices, beginners can effectively leverage this strategy to enhance their trading results. Remember that navigating cryptocurrency exchanges requires diligence and continuous learning, as highlighted in A Beginner's Guide to Navigating Cryptocurrency Exchanges with Confidence. Choosing the right exchange for your needs, such as those catering to beginners in Italy as discussed in What Are the Best Cryptocurrency Exchanges for Beginners in Italy?, is also a crucial first step.

Recommended Futures Trading Platforms

Platform	Futures Features	Register
Binance Futures	Leverage up to 125x, USDⓈ-M contracts	Register now
Bitget Futures	USDT-margined contracts	Open account

Join Our Community

Subscribe to @startfuturestrading for signals and analysis.