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Limit Orders

Comprehensive Guide to Limit Orders on Clober​

A Limit Order allows traders to set the price at which they want to buy or sell an asset, offering more control over trades compared to market orders. Here’s a detailed guide on how limit orders work on Clober, how to use them, and what makes them uniquely powerful.

What is a Limit Order?​

A limit order allows you to:

  1. Specify Your Price: You can set the maximum price you're willing to pay to buy or the minimum price you're willing to accept to sell.
  2. Control Execution: If your specified price isn’t available, the order remains open until it is matched or canceled.
  3. Add Liquidity: Any unmatched portion of your order is posted to the order book, waiting for other traders to match it.

How to Place a Limit Order on Clober​

  1. Go to the "Limit" Tab:
    • Select the Limit tab from the interface to place your order.
  2. Choose the Trading Pair:
    • For example, trading WETH/USDC involves Wrapped ETH (WETH) and USDC.
  3. Input Order Details:
    • Price: The rate at which you want to trade.
    • Amount: The quantity of the asset you want to buy or sell.
  4. Optional "Post Only" Mode:
    • Selecting "Post Only" ensures that your order does not match any existing orders, avoiding taker fees.
  5. Place Your Order:
    • Review the details and confirm your order.

What Happens After You Place a Limit Order?​

  1. Immediate Matching:
    • If there are existing orders at your specified price, your order will execute immediately for the matching portion.
  2. Unmatched Portion Posts to the Order Book:
    • Any unmatched portion remains in the order book, waiting for a counterparty to take it.
  3. Track Your Orders:
    • Active limit orders can be viewed and managed in the Open Orders section.

Why Use Limit Orders on Clober?​

  1. Price Control:

    Limit orders ensure you only trade at your preferred price or better. Unlike market orders, you are never forced to accept unfavorable rates.

  2. Transparency and Security:

    All transactions occur on-chain, ensuring a trustless and secure trading environment.

  3. Gas Efficiency:

    Clober's order matching system is optimized to minimize gas fees, making trades cost-effective.

  4. MEV-Resistance:

    A major advantage of limit orders is their protection against Miner Extractable Value (MEV) attacks.

    • Your trade only executes at your preferred price or better.
    • Unlike AMM swaps, where external actors can manipulate or frontrun your transaction to adjust your exchange rate, limit orders eliminate this vulnerability.
    • This ensures fair execution and prevents external manipulation of your trades.

  5. Liquidity Contribution:

    Unmatched portions of your limit order contribute to the order book’s liquidity, fostering a healthier trading environment.

Understanding Fills and Claims​

  1. Partial and Full Fill:
    • A limit order can be:
      • Fully Filled: The entire order is matched.
      • Partially Filled: Only part of your order is matched, with the rest remaining in the order book.
  2. Manual Claiming of Proceeds:
    • When a limit order is filled, the proceeds (e.g., the assets you received from the trade) are not automatically added to your wallet.
    • Instead, you must manually claim them to minimize gas costs and optimize the system.
  3. Canceling Orders:
    • If you cancel a partially filled order:
      • The matched portion remains settled in your wallet.
      • The unmatched portion is returned to you in its original form.

Frequently Asked Questions (FAQ)​

1. What happens if I place a limit order above or below the market price?

  • For buy orders, any matching portion executes immediately, while the rest posts to the order book at your set price.
  • For sell orders, the same applies in reverse.

2. Why do I need to claim proceeds manually?

  • Clober batches proceeds for claiming to optimize gas fees and improve efficiency.

3. Can I cancel a partially filled order?

  • Yes. The traded portion remains settled, and the unmatched portion is refunded.

4. What does "Post Only" mean?

  • The "Post Only" mode ensures your order only posts to the order book without matching existing orders, protecting you from taker fees.

5. How does Clober prevent MEV attacks?

  • Your trade executes strictly at your preferred price or better, ensuring that no external party can manipulate or frontrun your order like they might in AMM-based systems.

Key Takeaways​

  • Limit orders allow precise control over trading prices and protect you from unfavorable executions.
  • On Clober, unmatched portions of your order remain in the order book, ensuring they are filled at fair rates.
  • The MEV-resistant design ensures trades are immune to manipulation, providing a fairer and safer trading environment.
  • Manual claiming reduces gas costs and aligns with Clober’s goal of efficient on-chain trading.

Leverage Clober’s fully on-chain, programmable trading infrastructure to enhance your trading experience while maintaining security and control!