Learn Forex: Stop Order vs Limit Order


Buy / Sell Stop and Buy / Sell Limit

Instead of continually monitoring the price, investors can place a Limit Order or a Stop Order on their trading platform. These orders are instructions for automatically executing trades when the price reaches a certain level.

BUY STOP

Buy Stop Order instructs the broker to buy a currency pair at a specific price above the current market price.
For example, we are trading EUR / USD. It is currently at 1,13100 and I want to open long if it passes resistance at 1,13200.
I set my Buy Limit to 1,3210 and once it is at that level the position will open automatically.

BUY Limit

A Buy Limit order instructs the broker to buy a currency pair at a specific price below the current market price.
For example: Taking the EUR / USD example. 1,13100 is currently and I want to open long if the market value drops to 1,13000.
I put my Buy Stop on 1,13000, and once it's at this limit it will open position automatically.

The same applies to Sell orders.
If I want to open a selling position above the market price I put a Sell Limit.
If I want to open a sell position below the market price I put a Sell Stop.


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