Passive Order

A passive order is a type of order in financial markets where a trader places a buy or sell order at a specified price, waiting for the market to reach that price rather than seeking immediate execution. Passive orders often sit in the order book until matched with an active order from another trader. These orders can help traders save on transaction costs by acting as market makers rather than takers, earning rebates from exchanges in some cases.

Example

A trader places a passive buy order for 100 shares of a stock at $50, waiting for the market to reach that price instead of buying immediately at the current market price of $51.