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Buy Stop

A buy order where the price stipulated is higher than the current price. The rationale here is when the buyer believes that if the security breaks a certain resistance, the security will continue to rise.

Used to limit losses by those who have previously sold short.

Additional Comments:

Example: A client shorts XYZ at 60 per share and wants to limit their loss to about 5 points. Aswith the sell stop order, once the stock has risen to 65 the order will be triggered and then filled atthe next trade. The resultant price may be 65, or more or less — it depends on the volatility at thatmoment.

Related Terms:

Stop Limit
This is an order that says once the stock's market price touches or goes below the ...

Stop Order
A stop order is an order to buy or sell a stock once the price of ...

Stop-Loss Order
An order to sell when the price of the stock declines to, or below, a stated ...

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