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 orders from extreme market movements and abnormal trading activity.
When the market is highly volatile, the bid-ask spread on the orderbook might be large, and the best bid/ask price might deviate from the contract mark price. Buy/sell market orders or Limit orders may expire or be partially filled due to the Market/Limit Order Price Cap/Floor Ratio, which is prevalent in extremely illiquid market conditions.
For instance, a limit order will expire if the difference between the limit order price and the mark price exceeds the Limit Order Price Cap/Floor Ratio. A buy market order will expire if the difference between the best ask price and the mark price exceeds the Market Order Price Cap/Floor Ratio. A sell market order will expire if the difference between the best bid price and the mark price exceeds the Market Order Price Cap/Floor Ratio.
Please be aware that in the event of extreme price movements or deviation from the price index, Binance will undertake additional protective measures, including but not limited to changing the threshold of the order price cap.
How are market orders impacted in illiquid and volatile market conditions?
During volatile market conditions, the price of a contract can move significantly in a short period, 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 minimize 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.
Please note that certain limit orders that exceed the Limit Order Price Cap/Floor Ratio threshold may expire or can only be partially filled. This could be due to the buy limit order being higher than the price cap, or the sell limit order being lower than the price floor.