A Post-Only Order is an option that ensures the orders are placed in the order book as a maker order. Therefore the traders will be guaranteed to receive a maker rebate when the order is eventually executed. Furthermore, traders that aim to avoid paying Taker Fees can utilize this option as orders that are expected to immediately execute upon order placement will be automatically canceled or fail to execute while the post-only order is checked.
<Post-Only Order Example>
In a highly volatile market like a breakout, David tries to go long BTC/USDT contracts at 9000 USDT when the current best ask price in the order book is 9005 USDT but quickly moved to 8990 USDT when the Limit Order is finally placed.
Since the best ask price has changed to a lower price, a better quote of 8990 USDT for going long in comparison to the order limit price of 9000 USDT, the order will be automatically rejected from the engine and order book, hence canceled. This implies that with the post-only option, David will only be exposed to maker rebates and does not have to pay any taker fees that were unintended.
If the post-only order was not checked, the order will be immediately executed as a taker order from the best available ask price until it reaches (if it reaches) the order limit price of 9000 USDT. Therefore this has resulted in David paying a taker fee when he was, in fact, expecting to receive a maker rebate.
*Note: The GoodTillCancel Order is implied in this example. The order may differ depending on the Time in Force strategy used.