Encyclopedia DeFi · Entry 334
Reduce-only orders: closing exposure without reversing it
In this article
At a glance
Key facts
| Fact | Detail | Source |
|---|---|---|
| Exposure | A reduce-only order cannot enlarge or flip the position under the documented rule. | [1] |
| Policy | The cited dYdX guide supports reduce-only with IOC. | [1] |
| Conditional orders | Documented stop/take-profit orders can resize to remaining position size when triggered. | [1] |
Protect against an outdated close size
Suppose a trader is long 4 A of contract exposure and places two separate sell instructions. If the first closes 3 A, only 1 A remains long. An unrestricted later sell of 4 A could close that unit and establish a 3 A short. A reduce-only constraint prevents that reversal.
This describes exposure, not ownership of spot tokens.
Rejection and resizing are different outcomes
The dYdX guide distinguishes oversized market/limit orders, which can be rejected, from reduce-only stop or take-profit orders that resize at triggering. Do not assume every platform silently trims every oversized order.
The flag also does not create liquidity or remove price constraints. A valid reducing order can be partially filled or unfilled.
Check what remains after execution
After a fill, inspect the actual position and any other live closing orders. A button labelled Close may apply useful defaults, but a separately submitted market order need not inherit them. The transaction record and position state are the evidence that exposure changed.
Direct answers
Questions people ask
Can reduce-only open my first short position?
No. With no long position to reduce, a sell that establishes a short contradicts the constraint.
Inspect the evidence
The answer and key facts have stable claim links. These records retain the scope and qualification when reused.
Reduce-only restricts an order to decreasing an existing position rather than increasing exposure or reversing its direction. It is useful when several closing instructions coexist, but the exact rejection, resizing and time-in-force rules are implementation-specific. The retrieved dYdX guide requires IOC for reduce-only orders.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T19:18:00.092Z.
Link to this claimExposure: A reduce-only order cannot enlarge or flip the position under the documented rule.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T19:18:00.092Z.
Link to this claimPolicy: The cited dYdX guide supports reduce-only with IOC.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T19:18:00.092Z.
Link to this claimConditional orders: Documented stop/take-profit orders can resize to remaining position size when triggered.
Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T19:18:00.092Z.
Link to this claimRevision history
- — First publication after primary-source research and separate automated verification.
Source register
Sources and references
Retrieval dates and locators are recorded individually.- Reduce Only OrderdYdX Operations Services
Version-scoped IOC requirement and reduction behavior.
Locator: Requirements; How it works · Version / scope: Documentation retrieved for the 2026-10-02 editorial scope; content hash recorded · Retrieved: 2026-10-02T18:53:20.744ZOpen source - Interface of the Trade tabdYdX Operations Services
Definition and presentation of trading market metrics.
Locator: Orderbook; Position information; Stats · Version / scope: Documentation retrieved for the 2026-10-02 editorial scope; content hash recorded · Retrieved: 2026-10-02T18:53:20.712ZOpen source
Research and drafting use AI assistance. A separate automated review checks claims against primary sources; no external expert or named human review is implied. Publication, substantive editing, source retrieval and verification are recorded separately. This version was independently checked by an automated reviewer on 2 October 2026.
Editorial method and correctionsDegrees of Satoshi editorial project. “Reduce-only orders: closing exposure without reversing it.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/reduce-only-orders/