Summary

The market consists of placing orders and taking orders. The buy and sell orders created by the Pending party are often not executed immediately (for example, "Bitcoin can be sold when the price reaches $15,000"). Therefore, this creates liquidity for orders, meaning that when conditions are met, other users can instantly buy or sell Bitcoin. We refer to users who place immediate buy or sell orders as takers. In other words, the taker will fulfill the order created by the maker.

Introduction

No matter what type of trading platform (foreign exchange, securities or cryptocurrency), Both buyers and sellers will be matched. Without these meeting points, you will need to advertise on social media, advertising your Bitcoin-to-Ethereum exchange in the hope that other users will be interested.

In this article, we will discuss the concepts of Pending Party and Taker Party. Every market participant has embodied at least one of these roles at one time or another, and in fact, as a trader, you are likely to have filled both roles at some stage. Placers and takers are the source of vitality for many trading platforms, and their presence (or absence) is the key to distinguishing the strength of a trading platform.

About liquidity

We must discuss liquidity first before we can properly understand the pending order side in depth later And eat one side. If you hear someone say that certain assets are liquid or illiquid, they are actually talking about how easy it is to sell that asset.  

An ounce of gold is a highly liquid asset because gold can be easily cashed in within a short period of time. To give a negative example, a ten-meter-tall statue of the CEO of Binance riding a bull is a highly illiquid asset. While placing it in your front yard is a great idea, the reality is that not everyone is interested in this statue.

Market liquidity is a similar concept, but slightly different. A liquid market is one where you can easily buy or sell an asset at a reasonable price. The demand from buyer users is often very large, while the supply from seller users is often not small.  

With such intense activity, buyers and sellers tend to meet at price midpoints: the lowest sell order (orAsk price) meets the highest price buy order (or The amount of the purchase price is similar. Therefore, the difference between the highest buying price and the lowest selling price is small, sometimes even negligible. The difference between the two is called the bid-ask spread.

In contrast, illiquid markets tend not to exhibit these attributes. If you want to sell an asset, it will be difficult to get a reasonable price due to oversupply. As a result, bid-ask spreads in illiquid markets are very wide.

Now that we have mastered the concept of liquidity, let’s continue to understand the makers and takers in depth.

Market placer and market taker

As mentioned above, traders gathered on the trading platform Either the party placing the order or the party taking the order.  

Pending order 

Trading platforms usually calculate the market value of assets through order books. The order book collects all the user's buy and sell quotes. For example, you might submit an instruction like: Buy 800 Bitcoins for $4,000. Once the order is added to the order book, it will be executed immediately if the price reaches $4,000.  

"Post only" orders require you to add the order to the order book in order to announce your intended price in advance. You are called the Maker because, in a sense, you are the creator of the market. The trading platform operates similar to a grocery store. The trading platform charges individuals to put goods on the shelves. The difference is that you need to add inventory yourself.

Generally speaking, large investors and institutional investors (such as those who specialize in high-frequency trading) often assume the role of placing orders. However, small traders can also act as pending orders by placing certain types of orders that will not be executed immediately.

Please note that using a limit order does not guarantee that the order will become a pending order. If you want to ensure that the order is added to the order book before the transaction is completed, please select "Pending Order Only" when placing the order (currently only applicable to the web version and desktop version).

Takers

Using the same analogy as a store, if you are the boss, you will definitely put the inventory on the shelves on, waiting for customers to purchase. Customers take both sides. But instead of taking cans of soy from the store, they will consume the liquidity you provide.

Think about this: If you place a quote on the order book, it means increasing the liquidity of the trading platform, because users can easily buy or sell assets after knowing this information. On the other hand, takers consume this part of the liquidity.  This is done through a market order, an order to buy or sell an asset at the current market price. When they do this, existing orders in the order book are filled immediately.

If you have ever placed a market order to trade on Binance or another cryptocurrency exchange, you are a taker. Note, however, that you can also use a limit order to act as a taker. In other words: once you accept someone else's order, you become the taker.  

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Publication and taker fees

Many trading platforms charge matching user transaction procedures to earn considerable profits. This means that when you create and execute an order, you pay a small fee. But this amount varies from trading platform to trading platform and may also vary based on the size of the transaction and your role.

Generally speaking, only pending orders can increase liquidity for the trading platform, so you can get some rewards. For enterprises, this is beneficial but not harmful, because the psychological subtext of potential traders at this time is:This platform is really good! And with high liquidity, I should trade here. After all, it is easier for customers in a high-liquidity platform to close a deal, making it more attractive than a low-liquidity platform. In many cases, takers pay higher fees than makers because they cannot provide the same liquidity as makers.

As mentioned before, the fee structure for placing and taking orders often depends on the platform. You can go to Binance’s fee schedule page to learn about the difference in pricing between pending and taker orders.

Summary

To sum up, the pending order is a trader who creates an order and waits for others to complete the order. , and the taker is the trader who completes other people's orders. The key difference between the two is that the order side of the market can provide liquidity, but the taker side does not have this ability.  

For trading platforms that use the order and taker modes, the order side occupies an important position because it can increase the attractiveness of the platform as a trading place. Generally speaking, because the placing order can provide liquidity, the trading platform will often reduce its handling fee as a reward. On the other hand, takers can also use this liquidity to buy and sell assets more easily, but often have to pay higher fees for doing so.