Buy stop

Also called Buy stop order, Buy stop entry order, Stop buy order

A buy stop is a pending order to buy at a set price above the current market price. It does nothing until price rises to that level, then it becomes a market order and fills.

A buy stop lets you trade a breakout without watching the screen. The catch is that you agree to pay more than today's price, and in a fast move you can pay more than your own level, so your real risk can be bigger than planned.

When a buy stop fires and the price you actually get

A buy stop waits on the broker's server until the ask price reaches your stop price. The ask is the price you buy at. At that moment the order becomes a market order and fills at the best price available.

Most of the time the fill is at your level or very close to it. In a fast move, the next available price can be higher. That difference is slippage. On a buy stop it almost always costs you money.

The trigger uses the ask, not the bid. Most charts draw the bid line. So your order can fill while the candles seem to stop a little short of your line, by about the size of the spread. Your order did not fire by mistake. The chart just isn't showing the price that triggers it. The picture below shows this with illustrative prices.

Bid candle high, ask price and buy stop level at the moment a buy stop fillsIllustration

The ask reaches your buy stop while the bid candle stops short.

Buy stop vs buy limit, sell stop and sell limit

Order	Where you place it	It fires when	The idea behind it
Buy stop	Above current price	Price rises to it	Buy only if the rise continues
Buy limit	Below current price	Price falls to it	Buy a dip at a lower price
Sell stop	Below current price	Price falls to it	Sell only if the drop continues
Sell limit	Above current price	Price rises to it	Sell a rally at a higher price

Where buy stop, buy limit, sell stop and sell limit orders sit relative to the current price

Illustrative paths. Stop orders sit on the far side of the move you want and fire as price keeps going. Limit orders wait for price to come back to a better level.

A simple rule: use a buy stop if you want in only after price breaks a level and shows strength. Use a buy limit if you expect a pullback first and want a lower price. If you set a buy stop below the market, the platform rejects it. That usually means you wanted a buy limit.

A buy stop limit adds a second price. When price hits the stop price, the platform places a buy limit order at your limit price, and you never pay more than that limit. Where you may put the limit price, above or below the stop, depends on your platform. If the limit can sit above the stop, the order fills on the breakout as long as price stays under your cap; if price jumps past it, the order doesn't fill and you miss the move. If the limit must sit below the stop, as on many forex platforms, the order waits for a pullback after the breakout and fills only if price comes back down to your limit.

Buy stop limit order: limit price above the stop versus limit price below the stop

Illustrative paths. With the limit above the stop, the cap protects you but a jump past it means no fill. With the limit below the stop, the order fills only if price pulls back after the breakout.

A breakout buy stop on EUR/USD, worked step by step

All figures in this example are illustrative. EUR/USD has stalled under 1.1040 several times. You place a buy stop at 1.1050, ten pips above that ceiling. The ten pips cover the spread plus a buffer. The earlier tests topped out between 1.1036 and 1.1040, so a small poke through the level does not trigger it. Your stop loss is at 1.1020 and your take profit at 1.1110. You trade 0.10 lot, a mini lot of 10,000 units.

The chart below shows the setup. One candle pokes above 1.1040 but turns back before reaching 1.1050, so the order stays pending. The next candle runs through 1.1050 and the order fills.

EUR/USD buy stop placed above a 1.1040 ceiling and filled on the breakoutIllustration

At the last candle the trade is still open, 10 pips short of the target at the close.

On a USD-quoted pair, 0.10 lot is worth 10,000 × 0.0001 = $1 per pip. From 1.1050 down to 1.1020 is 30 pips, so you risk $30. Up to 1.1110 is 60 pips, so the target is $60.

Now suppose a news spike fills you at 1.1058 instead. Your stop loss is still at 1.1020, so the trade now risks 38 pips. The calculation below shows how slippage adds risk you never chose.

How slippage raises the risk on a 0.10 lot buy stop

Pip value, 0.10 lot10,000 × 0.0001= $1

Planned risk(1.1050 − 1.1020) ÷ 0.0001= 30 pips

Planned risk in money30 × $1= $30

Risk after fill at 1.1058(1.1058 − 1.1020) ÷ 0.0001= 38 pips

Risk in money after slippage38 × $1= $38

Extra risk from slippage$8

How a buy stop loses money: the false breakout

The main way a buy stop loses is a false breakout. Price rises through the level and fills your order. Then it falls back into the range and hits your stop loss. You paid the breakout price and got no breakout.

You can't avoid every false breakout, but you can choose when to risk one:

If price has tested the level 3 or more times with shrinking pullbacks, a buy stop above it is reasonable. Each dip is smaller, so buyers keep pressing and sellers at the level are thinning out.
If the level is a round number in a quiet session, don't leave a plain buy stop there. Wait for a candle to close above the level, or use a buy stop limit so a brief spike can't fill you at a bad price.

How far above the level to place the order: buy stop = level + spread + buffer. The spread matters because the order triggers on the ask. The buffer should be larger than the usual pokes past the level, which you can read off the earlier highs.

A bigger buffer filters out more false breakouts, but it costs you. You enter later, and with the stop loss in the same place your pip risk grows. So you either accept a smaller target in pips or trade a smaller lot.

What you enter when you place a buy stop

Whatever platform you use, a buy stop asks for the same few details:

Price: your trigger level, above the current ask.
Volume: your lot size.
Stop loss and take profit: the platform attaches them once the order fills.
Expiry: the choices depend on your broker, often good until cancelled, end of day, or a date and time you choose.

For a buy stop limit, you also enter the limit price.

Checks before you leave a buy stop working

Move the stop loss with the order. If you shift the buy stop, shift the stop loss by the same distance so the pip risk stays the same.
Minimum distance. Many brokers don't accept pending orders too close to the market. If yours is rejected as an invalid price, move it further away.
Spread spikes. Around news and the daily rollover the spread can widen. A wider spread can push the ask to your level even if the bid never gets there.
News and weekends. If you don't want a gap fill, set the order to expire before the event or cancel it before the market closes for the weekend.
Two-sided setups. If you place a buy stop above a range and a sell stop below it, cancel the other order as soon as one fills, unless your platform has a one-cancels-the-other option.
Free margin. Margin is checked when the order fills. If your account is short of margin at that moment, the order can be rejected.

FAQ

What price triggers the stop loss on my short trade?

The ask. A stop loss on a short position works like a buy stop: it buys the position back if price rises to your level. It follows the same trigger rules: it fires on the ask and can slip in a gap.

Do I pay spread, commission or swap while a buy stop is pending?

Usually not. Costs start when the order fills and opens a position. Overnight swap counts from that point too.

Does my buy stop stay active if I close the platform or turn off my phone?

Yes. The order sits on the broker's server, not on your device, so it can fill while you are away. Attach your stop loss and take profit before you log off, because you may not see the fill until later.