A Chasing Limit Order is a limit order placed at the best bid or ask price. It dynamically adjusts the entry price based on changing market conditions until the order is filled, canceled, or reaches the maximum chasing distance.
If users want to execute large limit orders while minimizing waiting time and potential slippage, a Chasing Limit Order can be a more effective option. Chasing Limit Orders offer the following advantages:
- Fast Execution: With a Chasing Limit Order, users can quickly enter the market as a maker order, minimizing the time spent waiting for a favorable price level.
- Reduced Slippage: Chasing Limit Orders help reduce the risk of slippage by dynamically tracking the best bid/ask price and staying as close as possible to the user's desired entry price.
- Arbitrage Opportunities: Chasing Limit Orders can create potential arbitrage opportunities by closely tracking market movements, allowing users to potentially profit from price differences across different markets or trading pairs.
How Does a Chasing Limit Order Work?
When using a Chasing Limit Order, users can set the chasing price to the best bid/ask price or set a fixed chasing distance from the best bid/ask price. The chasing distance can be specified as a price or percentage and should fall between the best bid/ask price and the order price. The platform will then continuously adjust the chasing price to maintain the preset chasing distance until the order is filled, canceled, or reaches the maximum chasing distance.
The maximum chasing distance can be set as a fixed value or percentage. Once the maximum chasing distance is reached, the order will stop chasing the market and maintain its current price. If you set a trigger price for the Chasing Limit Order, the strategy will be triggered when the last traded price reaches that price.
Users can understand the flexibility of Chasing Limit Orders through the following two scenarios.
Scenario 1: Chasing the Best Bid/Ask Price
When chasing the best bid/ask price, the order price will continuously follow the latest best bid/ask price in the current order book until the order is fully filled or reaches the preset maximum chasing price, at which point the strategy will stop.
Here is an example. Suppose a user places a buy Chasing Limit Order for 200 ABC at the current best bid of 100 USDT. After the order is placed, the market price and best bid increase to 101 USDT. To match the new best bid and wait for execution, the limit price of the Chasing Limit Order is immediately updated to 101 USDT.
If the user sets the maximum chasing distance to 5 USDT and the maximum chasing price to 105 USDT, the limit price changes as follows:
| ABC/USDT | Initial Entry Price | Last Traded Price (LTP) ↑ | Last Traded Price (LTP) ↑ |
| Last Traded Price (LTP) | 100 | 101 | 106 |
| Best Bid | 100 | 101 | 106 |
| Best Bid Chasing Distance | 0 | 1 < Max Chasing Distance | 6 > Max Chasing Distance |
| Limit Price | 100 | 101 | Order price remains 105 |
Scenario 2: Best Bid/Ask Chasing Distance
Users can also place a Chasing Limit Order by setting a fixed chasing distance from the best bid/ask price in terms of a price or percentage. If the market price and the limit price converge, the Chasing Limit Order remains unchanged. If the gap between the two widens (indicating a less favorable price), the limit price will adjust to a new price point that maintains the preset distance from the best ask/bid price.
For example, suppose a user places a buy Chasing Limit Order for 200 ABC with a chasing distance of 2.5% of the market price. If the market price is 100 USDT when the order is placed, the order price of the Chasing Limit Order will be 100 USDT × (100% - 2.5%) = 97.5 USDT.
The table below illustrates how the price of a Chasing Limit Order adjusts as the market price fluctuates to find the best bid/ask price within the preset distance.
| ABC/USDT | Initial Entry Price | If Last Traded Price (LTP) ↓ | If Last Traded Price (LTP) ↑ |
| Last Traded Price (LTP) | 100 | 99 | 110 |
| Best Bid | 100 | 99 | 110 |
| Chasing Distance (Ratio) | 2.50% | 2.50% | 2.50% |
| Price Difference | 2.5 | 1.5 | 12.5 |
| Limit Price | 97.5 | 97.5 (Unchanged) | 107.25 (Maintain Chasing Distance) |
Note:
— Each user can place one Chasing Limit Order in each direction (buy/long or sell/short) for each trading pair. Open Chasing Limit Orders can cover a maximum of 10 different trading pairs, and each UID can have a maximum of 20 open Chasing Limit Orders.
— The minimum and maximum chasing distances are 0.01% and 10% of the last traded price, respectively, with a maximum precision of two decimal places.
— To ensure execution as a Maker order, all Chasing Limit Orders are set as Post Only by default. If there is significant market volatility and your order is rejected five times due to post-order execution conditions, the strategy will be canceled.