A Trigger Order submits a Market Order only after a specific price condition (the Trigger Price) is met.
Unlike a standard Market Order (which executes immediately) or a Limit Order (which waits for a specific quote), a Trigger Order executes a Market Order once the Mark Price hits the pre-defined trigger.
Trigger Price: Based on the Mark Price.
Execution Price: Based on the Quoted Price.
Because a Trigger Order converts into a Market Order upon triggering, set your Slippage Limits to ensure that your final fill price aligns with your expected trigger price.
Key Characteristics
1. Price Control: Moderate
You have precise control over the start of the trade (the Trigger Price), but you do not have absolute control over the final fill due to the nature of Market Orders.
2. Speed of Execution: Depends
Order execution depends on market movement. If the market moves quickly and crosses your trigger price, execution is nearly instantaneous. However, if the Mark Price never reaches your trigger, the order will remain open indefinitely.
3. Price Mechanism: Mark + Quote
A Trigger Order activates once the Mark Price hits your pre-determined trigger, opening a Market Order which fills based on the current Quote Price.
Trigger orders will only process when both the trigger condition is met and the estimated slippage is within the defined slippage limit. Otherwise, the order will remain pending.