To help you avoid trading at a price that is not consistent with a fair and orderly market, Binance sets price ceilings for buy-market orders and price floors for sell-market orders. This trading rule helps protect your market orders from extreme market movements and abnormal trading activity.
For instance, when the market is highly volatile, the contract’s price may deviate away from the mark price. In these situations, a buy/sell-market order would expire if the distance between the contract’s last price and the mark price exceeds a predetermined threshold. Assuming a threshold of 10%, when the market price of a contract is 10% higher or lower than its corresponding mark price, your market order will expire.
How are market orders impacted in illiquid and volatile market conditions?
During periods of volatile market conditions, the price of a contract can move significantly in a short period of time, causing market orders to execute at an undesirable price.
If you place market orders under these circumstances, they may expire or be partially filled due to the Market Order Price Cap/Floor Ratio, which is prevalent in extremely illiquid market conditions. Once the Market Order Price Cap/Floor Ratio exceeds the threshold, any unfilled market orders will expire.
Although the Market Order Price Cap/Floor Ratios are set at a level intended to balance the objectives of trade certainty and minimized price risk, there is a possibility that a trade may be delayed or may not take place. In addition, please note that contracts may have varying Market Order Price Cap/Floor Ratios which may affect the speed and certainty of trades.