Reduce-only order
Reduce-only is a futures order setting that lets an order only reduce or close an open position, never open a new one or add to the current one.
How it works
A normal sell order for 1.5 ETH while you are long 1 ETH closes the long and opens a 0.5 ETH short. With reduce-only that will not happen: the excess is trimmed or the order is rejected, depending on the venue. The position can only go down to zero.
The flag is most useful for take-profits and stops placed in advance. If the position has already been closed by hand or by another order, a leftover reduce-only order will not turn into an accidental trade in the opposite direction. Many exchanges make stops and take-profits reduce-only by default, but not all do.
Reduce-only does not guarantee a fill and does not protect against slippage. It only restricts direction: the order can only take you out.
You are long 1 ETH. You set a take-profit to sell 1 ETH at $3,300 and a stop to sell 1 ETH at $2,900. Price reaches $3,300, the take-profit fills and the position is closed. Without reduce-only, the $2,900 stop could stay live and open a new 1 ETH short on a drop. With reduce-only it simply will not trigger a trade.
The mistake is placing several exits as normal orders and forgetting them after the position closes. Later one of them fills and opens a position you never planned. Turn on reduce-only for every exit order and check for leftover orders after you close.
Questions and answers
What is a reduce-only order in simple terms?
It is a close-only checkbox. An order with it can shrink your position but will never open a new one.
When should I use reduce-only?
On every order that is meant as an exit: take-profits, stops and partial closes. It prevents your position from flipping by accident.
What happens if a reduce-only order is larger than my position?
It fills only up to your position size and the rest is cancelled, or the exchange rejects the whole order. Which one depends on the venue's rules.
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Updated: 2026-10-19