Quick definition An order with instructions to rest on the book without executing against existing orders. If the order would execute immediately, it is cancelled instead. What it is A post-only order is submitted with instructions to be added to the book as a new resting order. If an incoming order would match against existing liquidity on the opposite side of the book, the incoming post-only order is cancelled rather than filled. The order becomes a liquidity provider, never a liquidity taker. Why it matters Post-only orders are used by traders who want to earn rebates from the exchange. Many venues offer payment to the side that provides liquidity (the maker) and charge a fee to the side that consumes it (the taker). A post-only order ensures the trader pays the maker rebate instead of the taker fee. Practical example A trader submits a post-only buy order for 1,000 shares at 100.00. The current ask is 100.01. The order is not routed to take the ask. Instead, it is added to the book as a bid at 100.00. If a seller later hits the 100.00 bid, the trade executes. If no seller reaches 100.00, the order rests until cancelled. Post-Only versus Immediate-or-Cancel (IOC) A post-only order guarantees the order will not execute immediately. An IOC order requires immediate execution or cancellation. A post-only order is the opposite of an IOC order in intent. Fee impact On many exchanges, post-only orders pay the maker rebate, which can be 0.5 cents per share or more. Immediate-execution orders pay the taker fee, which is often in the 1 to 3 cent range. The fee difference can be significant for large orders. Market making strategies Algorithmic traders who provide liquidity to the market use post-only orders extensively. The rebates from providing liquidity generate profit even when the trader does not take speculative positions. Rejection conditions A post-only order is typically rejected if it would execute immediately. However, some venues allow the order to be routed to another venue where it might post successfully. See also - Limit order - Immediate-or-cancel (IOC) - Make or take fee model
