What are Market Orders and Limit Orders’ Upper and Lower Price Limits?
To ensure that your trading prices remain consistent with the market and to maintain fair and orderly market operations, BitTap has set upper and lower price limits for market buy orders and lower price limits for market sell orders. These rules effectively prevent your market orders from being affected by extreme market fluctuations or abnormal trading behavior.
In volatile market conditions, the spread between the best bid and ask prices in the order book can widen significantly, and the best buy/sell price may deviate from the contract’s mark price. In such cases, both market and limit orders may fail or be partially executed due to exceeding the price limit, which is common during periods of low liquidity or extreme market conditions.
Price Limit Examples
For example, if the price difference between a limit order and the market price exceeds the set upper/lower price limit, the limit order will fail. Similarly, if the difference between the best sell price and the mark price exceeds the market buy order’s upper price limit, the market buy order will fail. Conversely, if the difference between the best buy price and the market price exceeds the market sell order’s lower price limit, the market sell order will fail to execute.
It’s important to note that during extreme price fluctuations or when prices deviate significantly from the index, BitTap will implement additional protective measures, including adjusting the thresholds for order price limits.
The Impact of Market Orders in Low Liquidity and Volatile Market Conditions
In times of high market volatility, contract prices may experience rapid fluctuations, potentially causing market orders to execute at unexpected prices. If a market order is placed under such conditions, the order may fail or be partially executed due to exceeding the upper/lower price limit of the market order.
Understanding Price Limits
The upper/lower price limits for market orders are designed to balance transaction certainty and reduce price risk. However, in some cases, delays or failures in completing the transaction may occur. Additionally, different contracts may have varying upper/lower price limits for market orders, affecting transaction speed and certainty.
Please note that orders exceeding the upper/lower price limits for limit orders may fail or only partially execute. For example, if the price of a limit buy order is higher than the upper price limit or if the price of a limit sell order is lower than the lower price limit, the order may not fully execute.
