Order Book price pick for Limit Futures Long/Short orders

[Mike VanderBart]

Hey All,
I just want to validate the logic on how the price is being pick for me while placing an order for Limit Futures Perpetual.
If there is a good article or video, please point me to the right direction as somehow all I can find is just general description how the concept works which I get but I want to be sure I also understand this detail.

So assuming scenario where we have crypto pair YYY/USDT at AVG price  USDT 100.50 and currently sell orders are ranging between lowest USDT 100.00 to 101.00

Buy/Long
1. if I place an order anywhere above 100.00 USDT then the price will be picked for me at the lowest 100.00 assuming it can fill in all or part of my order
2. if I place an order anywhere below 100.00 USDT, say 99.50 then this will wait until price drops to my order price

Sell/Short
1. if I place an order anywhere above 100.00 USDT then the price will be picked for me at the lowest 100.00 assuming it can fill in all or part of my order
2. if I place an order anywhere below 100.00 USDT, say 99.50 then it will NOT wait until price drops but execute an order at the lowest possible which is 100.00

I'd want to confirm the logic but especially Sell/short since this is somehow counter intuitive.

Thanks
M

[Oshosondy]

Let me use bitcoin at market price of $25000 as an example.


If you go long or buy

If you set the limit order price above $25000, it would be filled immediately. It simply means you buy at higher price which will make your order to be filled at the market price. Which means it is a market order but you only just used limit order for it.

On the other hand, if you place the limit order price at below $25000. That is a limit order and your are a market maker. If the market price of bitcoin drops below $25000 (below the price your set), your order would be filled. But if the bitcoin market price did not drop to or below the price you set, your order will not be filled.


If you go short or sell

If you set the limit order price below $25000, it would be filled immediately. It simply means you sell at lower price which will make your order to be filled at the market price. Which means it is a market order but you only just used limit order for it.

On the other hand, if you place the limit order price at above $25000, the order will not be filled immediately. That is a limit order. If the market price of bitcoin increase to or above the price you set, your order would be filled. But if the bitcoin market price did not increase above the price that you set, your order will not be filled.

For this not to confuse you, you can trade with $1 on most exchanges with higher leverage. Just for testing, do not use leverage because it is dangerous than given profit.

[Mike VanderBart]

Thanks for the explanation.
So this basically means that If I want to go Short and place an order below 25 000 then it would be immaterially filled at the lowest market. Which is basically the same as Market.
Got it. Thanks !

[jeraldskie11]

I've been using the Binance exchange for a while now, and from what I've seen, it all depends on the order book. There is a section in the order book for both buy and sell orders. Your statement about the buy/long is correct in my perspective. The only thing I have to inform you about is the sell/short. Because you are selling your asset into USDT and you are selling above the market price, your order will not be filled instantly because it is dependent on buy orders, unless you are selling below the market price, in which case it will be filled immediately.

[Oshosondy]

Thanks for the explanation.
So this basically means that If I want to go Short and place an order below 25 000 then it would be immaterially filled at the lowest market. Which is basically the same as Market.
Got it. Thanks !

Try and read it again because I made some corrections. Also let me be more practical about it:

Bitcoin at $25000

For long/buy
You open a limit order at $25010 (above $25000). The order will be filled immediately
You open a limit order at $24990 (below $25000). The order will not be filled. If the market price of bitcoin gets to or drop below below $24990, your order will be filled.

For short/sell
You open a limit order at $24990. Bitcoin at market price of $25000. The order will be filled immediately
You open a limit order at $25010. Bitcoin price at $25000. The order will not be filled. If bitcoin increase above $25010, your order will be filled.

I hope you will understand it better this way.

It is even harder to explain than using it while trading, once you start to trade you will notice how simple it is.

I will advice you to be careful of trading derivatives, because leveraging is very risky. Trading itself is very risky, not to talk of future trading which is far riskier.

[rat03gopoh]

and currently sell orders are ranging between lowest USDT 100.00 to 101.00

Here you're giving rather ambiguous preferences, your focus is on looking at the highest bid and lowest ask, not on trading history.

Buy/Long
Sell/Short

If you go short in futures it works as if you were selling YYY on the spot market.
Suppose 100 is the highest bid, then your SHORT order will be filled immediately if you set a price of 100 or lower, otherwise the order will be queued before any of the highest bids touch or passed it up.

Let's say 100 is the lowest ask, then your LONG order will be filled immediately if you set a price of 100 or higher, otherwise the order will be queued before any of the lowest ask touches or passed it down.

[Eternad]

Thanks for the explanation.
So this basically means that If I want to go Short and place an order below 25 000 then it would be immaterially filled at the lowest market. Which is basically the same as Market.
Got it. Thanks !

You should focus looking on the order price both buy and sell because it’s related on limit order for your long and short. This analogy is correct if current price on the buy price is less than 25K. Simply limit order just give you the flexibility to place order on the price that you want that is not in the range of the current market price.

Don’t make it complicated. You can use this https://academy.binance.com/en/articles/what-is-a-limit-order  as reference for your inquiry.

[Aanuoluwatofunmi]

Thanks for the explanation.
So this basically means that If I want to go Short and place an order below 25 000 then it would be immaterially filled at the lowest market. Which is basically the same as Market.
Got it. Thanks !

You should focus looking on the order price both buy and sell because it’s related on limit order for your long and short. This analogy is correct if current price on the buy price is less than 25K. Simply limit order just give you the flexibility to place order on the price that you want that is not in the range of the current market price.

Don’t make it complicated. You can use this https://academy.binance.com/en/articles/what-is-a-limit-order  as reference for your inquiry.

You all have made it clear with your explanation on weather to go short or long which also depends on the position the trader want to take, but to an extent i want to believe that most people choose limit order whenever they want to buy or hold for long while market order whenever they are interested in selling over within the short time range, though trading could sometimes be more complex than we expect but I will like to also hear our own opinions from this in addition to what @Oshosondy narrated earlier.