What Is A Buy Stop Order? How To Trade With A Buy Stop Order

What is a buy stop order? How do you trade with a buy stop order on the mt4 trading platform?

What is the difference between a buy stop and a buy limit order?

What are the advantages of trading with a buy stop order?

Lets find out…

What Is A Buy Stop Order?

A buy stop order is a pending order that is placed above the current price in anticipation that price will head up, trigger it and continue moving up.

 

How To Place A Buy Stop Order On Mt4 Trading Platform

Placing a buy stop order using the mt4 trading platform is really simple:

Step 1: Right Click on The Chart That You Want To Trade In

And you’ll see something like this shown below:

  • then click “new Order”
  • then click “trading”

Step 2: Fill In The Details In The Order Box

When you click “trading” in step 1, a box will appear and that’s where you will need to specify a few things including:

  • volume (this is the lot or contract size of your trade)
  • stop loss
  • take profit
  • Under “type”, you need to select Pending Order
  • and Under “Pending Order Type”, select “buy stop”.
  • then you need to specify the price where you want to place the pending order
  • the last step is to click the “place” button and this will create a buy stop pending order for you on the chart.

What Is The Difference Between A Buy Stop Order And A Buy Limit Order?

A buy stop order is a pending order placed above the current price so if price goes up, it will hit it and trigger a buy trade and you expect that price will continue gong up so that you can make profit on that trade.

A buy limit order is a pending order that is placed below the current price with the anticipation that price will fall down and trigger it and then price will move back up so that profit can be made on that trade.

Advantages of Trading With Buy Stop Order

  • You wait for the price to come to you (your pending buy stop order), you are not chasing price.
  • activation of the buy stop order confirms bullish momentum to the upside (but that does not necessarily mean that your trade will become profitable)
  • you can set and forget…place your pending buy stop order and walk away instead of being glued to¬† the computer screen. You come and check later to see if your buy stop order is triggered or not.

Click this link if you also want to know about sell stop order.