BBO (Best-Bid-Offer) on WhiteBIT: In Search for the Best Price for Your Order

WhiteBIT
Published 13 May 2024
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BBO (Best-Bid-Offer) on WhiteBIT: In Search for the Best Price for Your Order

Content

Essentials: 

  • BBO (Best-Bid-Offer) is a trading feature that automatically determines the best price a seller is willing to accept (Ask) and the best price a buyer is willing to pay (Bid) in the order book and allows you to quickly execute trade deals on the most favorable terms at the moment.
  • BBO provides two methods for determining the most favorable price: the “Counterparty” and the “Queue” methods.
  • On WhiteBIT, the BBO option is available for Spot, Margin, and Futures trading.

How to place a BBO order? – Read the article in the Help Center.

What is a Best-Bid-Offer (BBO)? What are Its Features?

Best-Bid-Offer (BBO) is a trading function that indicates the highest price someone is willing to pay for an asset and the lowest price someone is willing to sell the asset for.

Let’s consider the two main components on which BBO relies:

  1. Best Bid: This is the highest price a buyer is willing to pay for an asset.
  2. Best Ask/Best Offer: This is the lowest price a seller is willing to sell an asset.

For example:

Best Bid: $51,800 USDT—This is the highest price at which someone is willing to buy Bitcoin now.

Best Ask: $51,850 USDT—This is the lowest price at which someone is willing to sell Bitcoin now.

These two prices determine the best buying and selling offers in the Bitcoin market at the current moment, and the difference between them, known as the “spread,” is $50.

By activating the BBO option when placing orders, the system automatically selects the best market prices for execution. This function is handy in dynamic market conditions where prices change rapidly. With BBO, traders can capture the most advantageous market prices without spending time constantly monitoring the order book.

How Do Orders with BBO Function on WhiteBIT?

By placing an order with the BBO, the trader instructs the system to execute his order at the best (or rather, most beneficial) available price in the market at that moment using two different methods: “Counterparty” and “Queue.”

  • Counterparty Method (Opposite Order-Book Side Price): The system sets the order price at the best available market price level on the opposite side of the order book.

Example: If a trader places a buy order, the order price will be set at the lowest current ask price in the order book. In the case of a sell order, the order price will be set at the highest buying price (Bid) in the order book.

  • Queue Method (Same Order-Book Side Price): The system sets the order price based on the best available market price on the same side of the order book as the order itself.

Example: If it’s a buy order, the order price will be set at the highest current buying price (Bid) in the order book. For a sell order, the order price will be set at the lowest selling price (Ask) in the order book.

What Are the Differences between Limit Orders with and without BBO?

A “Limit order with BBO” means the order will automatically adjust its price according to the Best Bid-Offer. In this case, the system will set the order price based on the current best bid or best offer, depending on whether it’s a buy or sell order. On the other hand, in a “Limit order without BBO,” you manually specify the price at which you want to buy or sell an asset, regardless of the current market prices.

Limit Orders with BBO Limit Orders
Price The system selects the best buying or selling price from the order book. Trader independently specifies the price for an order

 execution.

Price Dynamics It is dynamically adjusted to the best available buying or selling price during order placement. They remain unchanged and are executed only at the set price.
Execution The risk of non-execution is reduced as the price automatically adapts to market conditions. There is a risk of non-execution of orders due to sudden price

changes.

Benefits of Orders with ВВО

When placing a Limit order without BBO, you’d set the price at which you wish to execute the order yourself. This order will only be executed if the specified price matches the price offered by the market.

However, by activating the BBO function when placing an order, the order will be executed not only faster but also under the most favorable conditions. This is where the magic of BBO happens. This functionality enables traders to combine the speed of Market orders with the price control level of Limit orders, allowing them to effectively adapt to changes in market conditions and execute deals at optimal prices.