Reduce-Only Orders on Deribit

Article Deribit Insights

Summary

The document explains how reduce-only settings work for limit, market, and stop orders on Deribit. These orders can reduce an existing position but cannot open or reverse one. For limit orders, the exchange caps the order quantity at the open position size and adjusts or cancels other reduce-only orders as the position or order queue changes. The example shows how a newly placed order with execution priority can reduce the quantities of older exit orders so their combined size does not exceed the position.

Market orders are adjusted when executed, while stop orders may initially exceed the position size because they are not active book orders until triggered. At trigger time, their quantities are reduced to the available position. The article also describes an API close-position command and illustrates using a reduce-only take-profit and stop-loss to define exits. These mechanics help prevent accidental exposure from exit orders, but they do not guarantee a fill or a particular exit price; the document gives no performance evidence.

Key ideas

Reduce-only orders can close an existing position but cannot create a new one.
Limit-order quantities are adjusted so active reduce-only orders do not exceed the open position.
Market orders and triggered stops are reduced to the position size when they execute.
A reduce-only stop can be set before entry orders fill, according to the article.
The API close-position command can submit a market or limit exit.

How Reduce-Only Orders Limit Position Exits on Deribit

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