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Resting order

A limit order sitting in the book waiting to be traded against, providing liquidity rather than consuming it.

Resting is the passive half of every trade. You wait, you may earn a rebate under maker-taker pricing, and you buy below or sell above the midpoint — but you only trade when someone chooses to trade with you.

That choice is the cost. The flow that reaches a resting order is disproportionately informed, which is adverse-selection: you are filled most reliably exactly when the price is about to go against you.

Example: you rest a 1,000-share bid at 30.00 for two hours. Nothing happens while the stock hovers at 30.05. Then a seller arrives, you fill at 30.00, and the stock is 29.92 twenty seconds later. Your $50 of theoretical spread capture is an $80 mark-to-market loss.

Related: working-order, adverse-selection, queue-position, liquidity-taker

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Bid-ask spread in an order bookSell orders stacked above buy orders with a gap between the best of each.SELLERS (asks)50.0690050.051,40050.0460050.011,10050.002,30049.99800spread = 0.03BUYERS (bids)
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.

Educational only, not advice. Spotted an error? Post in Site Feedback.