Passive Execution Strategy

A Passive Execution Strategy involves placing orders into the order book as limit orders rather than hitting existing orders as market orders. By acting as a liquidity provider, the trader avoids paying the taker fee and instead may collect a maker rebate, depending on the exchange structure.

This approach is slower and carries the risk that the trade may not execute if the price moves away from the limit level. However, it is highly effective for minimizing market impact and controlling the entry price precisely.

In cryptocurrency derivatives, passive strategies are often used by market makers and large institutional desks to build positions over time. It requires a deep understanding of order book dynamics and the ability to anticipate short-term price movements to ensure the limit orders are filled.