Reduce-only order is an option of limit order. It’s main idea is to prevent the increasing of your open position and loosing your profit. That type of limit order reduce your position size by adjusting it to match the contract size of the open position. You can be sure that a limit order that was set to take profit will not be executed as a new position in the case that the current position has been already closed or liquidated. The system will automatically reject the placing of any reduce-only orders if there is no open position at the moment.
The reduce-only option is available only for margin and futures trading. Placing a Reduce-only order guarantees that, after the order is filled, the position will not be opened to the opposite direction. It takes into account the total quantity of the following:
existing reduce-only orders which are "closer" to the spread;
existing close orders which are "closer" to the spread.
If reduce-only orders in total tend to "flip" the position, the ones farther from the spread may be reduced in size up to the cancellation. If a new reduce-only order is the "farthest" from the spread, then its size is being reduced as well, or the request will be rejected.
Users can select the Reduce only checkbox in the Buy/Sell widget when placing a market or a limit order. The option is available for any TimeInForce value of a limit order.
When a Reduce-only order becomes active, a user can see an R icon next to the order ID in My Orders and Trades section.
Users can create new Reduce-only orders via API by passing the reduce_only query parameter