The market consists of Makers and Takers:
- Maker: Orders that are placed on the orderbook, waiting for execution passively.
- Taker: Orders that actively execute immediately with orders on the orderbook.
Makers increase the amount of orders on the orderbook, while Takers decrease it. In other words, Makers create liquidity for the market, allowing other traders to have more opportunities to buy or sell assets immediately.
Therefore, Maker’s fees are often lower. You can check your fee rate here.
Contents
The Relationship between Market/Limit Orders and Maker/Taker Orders
Market orders are always Taker orders because they execute immediately.
Limit orders are more complex. The passive part of the order is a Maker order, and the active part of the order is a Taker order. If the buy price is less than the best sell price or the sell price is greater than the best buy price, it is a passive execution. Otherwise, it is an active execution. Here are some examples based on this orderbook:
- All Maker Limit Order: Buy 1 ETH at 1840.4. Since the buy price is less than the best sell price of 1840.5, the order will passively wait for execution. Therefore, the entire order is a Maker order.
- All Taker Limit Order: Buy 5 ETH at 1840.5. Since the buy price is equal to the best sell price of 1840.5, and the order can execute immediately against the available sell quantity, the entire order is a Taker order.
- Partial Maker and Partial Taker Limit Order: Buy 10 ETH at 1840.5. First, the order will actively execute for 5.58 ETH at the best sell price of 1840.5. The rest of the order, 4.42 ETH, will passively wait for execution at 1840.5 because the best sell price now is 1840.6.
How to Ensure Your Order is a Maker Order
To ensure your order is a Maker order, follow these conditions:
- Choose a Limit Order.
- Set the Limit Order price to a more reasonable price than the current market price:
- If buying: less than the best sell price.
- If selling: greater than the best buy price.
- Choose “Post only”. If the system detects that the order cannot be fully executed as a Maker order, the order will not be placed.
Why Does My Limit Order Turn into a Taker Order Even Though the Price is Reasonable for Posting as a Maker Order?
The market may fluctuate before the order is placed, causing the Limit Order’s price to immediately execute as a Taker order. Therefore, using Limit Orders does not guarantee that your order will be a Maker order. If you want to ensure that your order is posted on the orderbook before execution, choose “Post only” when placing your order.
