A major benefit for using limit orders is that it enables traders to receive a maker rebate if the orders were to enter the order book first before execution. As such, the Order Price should be set at a price point better than the best BID/ASK price for them to successfully enter the order book. The screenshot below shows an example of the order book found on the Bybit platform:
In the screenshot above, the prices marked inside the red box signifies the best ASK prices or the prices traders are willing to sell. On the other hand, the prices marked inside the green box signifies the best BID prices or the prices traders are willing to buy in the market at that specific time. The two prices shown in between the boxes are the platform LTP and Mark Price (Denoted in yellow).
Therefore, to ensure that limit orders will enter the order book, the Order prices should be set at:
- Buy Long Order = Order Price LOWER than Best ASK Price
- Sell Short Order = Order Price HIGHER than Best BID Price
- Selects POST-ONLY function.
For example, in order to enter the order book, traders need to set their Buy order price at below USD 10248 and below or Sell order price at above USD 10247.50 and select Post-Only to fulfill the requirements stated above.