The rubber hand illusion is a well known somatosensory illusion, which was reported by Botvinick and Cohen in 1998. It has become almost classic in the research of body awareness.
[Botvinick, M. & Cohen, J. (1998). Rubber hands 'feel' touch that eyes see. Nature.]
In the experiment, the participant's real hand is hidden out of sight. Instead, a life-sized rubber hand is placed in front of the participant. The experimenter uses two brushes to stroke the real hand and the rubber hand synchronously. After a short period, most of participants start to feel the touch in the position of rubber hand and experience as if the rubber hand is the real hand.
Ehrsson tested the illusion in four conditions to manipulate the feeling of ownership of the rubber hand.
[Ehrsson, H. H., Spence, C., Passingham, R. E. (2004). That's my hand! Activity in premotor cortex reflects feeling of ownership of a limb. Science.]
1. Synchronous and Congruent: stroking synchronously the rubber hand and the real hand,
putting the rubber hand aligned with the real hand.
2. Asynchronous and Congruent: stroking asynchronously, the rubber hand aligned with the real hand.
3. Synchronous and Incongruent: stroking synchronously,
the rubber hand rotated 180 degrees pointing toward the participant.
4. Asynchronous and Incongruent: stroking asynchronously, the rubber hand rotated 180 degrees.
As is expected, the participants felt the most strong illusion in the first condition (synchronous and congruent). The touching stimuli should be synchronous and the orientation of the rubber hand need to be congruent with that of the real hand.
I guess, the position of the rubber hand must be in the circle of possible movements to create the illusion. If the rubber hand is outside the movability of the real hand (very far, rotated conversely, hung upside down, etc.) the participants will not be able to feel the illusion.
Illusion is the possible perceptions, as perception is the possible action.