What is a BBO order?

A BBO (Best Bid and Offer) order is a type of limit order that enables traders to place orders at the best available prices on the order book. Unlike traditional limit orders, which require traders to specify a price, BBO orders use dynamic and pre-defined options to capture the best available bid or ask prices. This makes BBO orders an efficient tool for traders to quickly capitalize on market opportunities with better execution prices.

What are the key features of the BBO order?

Dynamic price adjustments

The BBO order automatically adjusts to the current best bid or ask prices, adapting to real-time market conditions. This dynamic pricing approach ensures that orders align with favorable market levels without requiring constant manual adjustments.

Flexible order placement options

Traders can specify whether they want their orders to align with queue or counterparty prices on the order book:

• Queue levels (1-5): The queue option places orders at the best available prices on the same side as the trader’s order.
  • For buy orders, queue levels represent the best bid prices, with queue 1 being the highest bid price, and queue 5 being the fifth highest bid price.
  • For sell orders, queue levels represent the best ask prices, with queue 1 being the lowest ask price, and queue 5 being the fifth lowest ask price.
• Counterparty levels (1-5): The counterparty option places orders at the favorable prices on the opposite side of the order book.
  • For buy orders, counterparty levels correspond to the best available ask prices, with counterparty 1 being the lowest ask price, and counterparty 5 being the fifth lowest ask price.
  • For sell orders, counterparty levels correspond to the best available bid prices, with counterparty 1 being the highest bid price, and counterparty 5 being the fifth highest bid price.

How to place a BBO order?

Suppose you want to build a long position in BTC-PERP while aiming to save on the trading fees by getting filled at the best available bid prices (since maker fees are generally lower than taker fees), follow these steps:

1. Navigate the BTC-PERP trading pair
2. Select Limit Order and enable BBO
3. Set the BBO level to Queue 1 since the goal is to enter at the best bid price
4. Choose position size by specifying the amount of BTC to long
5. Place the BBO order by clicking Buy / Long

FAQs

Q: How does a BBO order differ from a standard limit order?

Unlike limit orders that require a specific price input, BBO orders automatically select the best available order book prices at the time of the order placement.

Q: What happens if the market moves after placing a BBO order?

Once the BBO order is placed and the order price has been determined based on prevailing orderbook conditions, the BBO order price will remain fixed even if the market later moves away from this price.

Q: Can a BBO order be partially filled? 

Yes, like standard limit orders, BBO orders can be partially filled if only part of the desired quantity is available at the selected price level.  The remaining order will continue to fill as more volume becomes available at that price level.

Q: Can a BBO order be modified after being placed?

BBO orders cannot be modified once placed. To change the order price or quantity, the existing order must be canceled, and a new order with the desired parameters should be placed.

Q: Will using a BBO order always guarantee maker fees?

BBO Orders using the Queue option will guarantee maker fees because the orders are placed on the same side of the order book as the user’s order. This allows the order to add liquidity, qualifying it for the maker fee rate. However, for Counterparty orders, maker fees are not guaranteed. In fact, counterparty orders will typically incur taker fees since they match with orders on the opposite side of the order book. In cases of partial fills, a mix of taker and maker fees may apply.