Order Book and IOC Orders: How Execution Works
When you click buy, the price you pay depends on what is available on the order book at that instant. Understanding the book and the order types avoids surprises and explains why bots prefer certain formats.
What the order book is
The order book is the list of all buy and sell offers for a coin, organized by price. Buys (bids) sit on one side, sells (asks) on the other. The best bid and the best ask are the prices closest to the middle, and the distance between them is the spread.
Each offer also has a size. If you want to buy more than the first level offers, the order consumes the next levels, at worse prices. This is called slippage.
The most common order types
- Market: executes immediately, at whatever is on the book, with no price control.
- Limit: only executes at the stated price or better. It can sit waiting.
- IOC (Immediate Or Cancel): immediately executes whatever is possible within the limit price and cancels the rest.
- FOK (Fill Or Kill): either fills everything immediately or cancels everything.
Why IOC fits arbitrage
In arbitrage, you want to get into both legs fast, but without paying a bad price. An IOC order with a limit price does both: it immediately fills what the book offers up to the price cap and cancels whatever is left. Nothing sits on the book waiting, and you never pay more than the limit you set.
In Multi Arbitrage, entries use IOC orders with a 0.10% slippage cap by default, in equal slices on both legs. If the price goes past the cap, the order is canceled instead of filling at a high price.
What can go wrong
If one leg fills and the other doesn't, the position is exposed. That's why the bot limits the slice to the side with less liquidity and checks both fills before moving on.
Other risks: the book changing between the moment you saw the price and the moment the order arrives, and low-liquidity coins, where every small slice already moves the price. See more in funding arbitrage risks.
Reading the order book in practice
Look at three things: the best bid and best ask (the distance is the spread), the size available on the first levels and the distance between levels. If the first levels have little volume and the next ones are far away, even an average order slips a lot. On coins like that, split the entry into slices.
Equal slices on both legs
If one exchange only has $50 available within the price cap and the other has $10, the slice is $10 on both. The side with more liquidity waits for the other. That way both legs grow together and the position stays balanced.
Related guide: making money with crypto without predicting the price. See also all the crypto arbitrage guides.
Frequently asked questions
Does IOC guarantee the order fills?
No. It fills only what is possible within the limit. If there isn't enough liquidity, it fills part or nothing.
What is the difference between IOC and FOK?
IOC accepts a partial fill. FOK requires filling everything or cancels everything.
What happens if the IOC order doesn't fill?
It is canceled. The bot tries again according to its rules, without leaving orders sitting on the book.
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This content is for information only and is not investment advice. Trading crypto derivatives involves a high risk, including the total loss of your capital. Past results do not guarantee future results, and the figures mentioned are examples. Before trading, check whether trading crypto derivatives is allowed in your country and what your tax obligations are. Assess whether the product suits your profile before investing.