Reduce-Only order is used by traders who would like to reduce their current position size or to close position completely. Therefore, by choosing Reduce-Only, any order which might increase their position will be cancelled or will be adjusted to the contract quantity to match the contract size of the open position. In total, Reduce-Only will ensure that your position will not be increased unintentionally. Traders prefer the Reduce-Only orders when they would like to take profit from their current position and prevent future unintended opening of opposite positions.
Please also note that when the Reduce-Only is ticked, a trader can't place any order when not holding a position.
Reduce-Only order example
1. Selecting Reduce-Only at the time of no open position, the order of buying 100 contracts at market price is cancelled immediately, as there is "No active position to close".
2. At the time of holding a position, then select Reduce-Only.
Place a Take Profit Limit Order to sell 100 contracts at the Limit price of US$8,600, at the time of holding Buy Long 10 contracts at US$8,563.5.
This Take Profit Limit order was placed successfully. Hence, it shows in the Active Orders list, but the system has reduced the size to 10 contracts (which is exactly the size to close the position).