What is Buy Stop and how to use it?

A Market Order is the type of order that allows buying and selling from the instant pricing seen on the market screen. The market order used in the options market is entered only by specifying the contract volume without entering the price. Until the entire order is fulfilled, it becomes a transaction by matching the best-priced orders on the opposite side.

The orders sent with the market order type match the pending orders on the opposite side as soon as the order is entered, thus enabling the quick opening of the trade. On the other hand, a buyer or seller who uses the market-priced type in sending orders is willing to buy or sell at the current price in the market. In addition, what is a buy stop limit order, what is stop limit buy, and what is buy stop loss are frequently asked questions. As ALB, we will share what you wonder about "buy stop" in this article.

Buy Stop

It is a type of pending order used in trading platforms. It is preferred to create a buying position above the current price. Investors usually place a buy-stop order at the price level they think will continue in the same direction when the price that has entered the consolidation process passes a determined resistance level.

When sending this order type, a price higher than the current price must be selected. The server will not accept a price below the current price. Once the buy-stop order is placed successfully, it is entered in the order book by giving a sequence number by the system. After that, the trader's disconnection or exit from the trading platform will not cancel the order. Instead, the system follows the market, and when the current price reaches the order price of the investor, the charge is executed regardless of whether the investor is online or not.

What is a Stop Order?

The stop order, also known as the stop limit, is a type in which you determine the trigger price and the amounts to be used in the trading pairs you will buy and sell. When the buy or sell trigger level you choose is reached, your transaction will be executed at the best price of the order level you have placed.

How is Stop-Limit Usage?

Stop-limit buy orders can help traders control the price they pay after setting the maximum acceptable cost per share. If the price rises to the stop price, this will trigger a buy order.

Two different price information must be provided to determine the stop limit level for buying. The buy-stop-limit order includes the stop price that triggers the buy order and the limit price, which indicates the maximum price you will pay per share.

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