Passive Order

A passive order is a limit order that sits in the order book waiting to be matched by an aggressive order. These orders provide liquidity to the market rather than taking it.

Passive buyers set their prices below the current market, while passive sellers set theirs above. They do not move the price directly but instead define the support and resistance levels.

Market makers rely on passive orders to capture the bid-ask spread. In order flow, the presence of large passive orders can indicate significant support or resistance.

They are the foundation of the order book and represent the depth of the market. Understanding the behavior of passive orders is essential for analyzing market structure.