Stop Entry Order
A stop order “stops” an order from executing until price reaches a stop price.
You would use a stop order when you want to buy only after price rises to the stop price or sell only after the price falls to the stop price.
A stop entry order is an order placed to buy above the market or sell below the market at a certain price.
Current price is the blue dot.In the image above, the blue dot is the current price.
Notice how the green line is above the current price. If you place a BUY stop order here, in order for it to be triggered, the current price would have to continue to rise.
Notice how the red line is below the current price. If you place a SELL stop order here, in order for it to be triggered, the current price would have to continue to fall.
As you can see, a stop order can only be executed when the price becomes less favorable to you.
For example, GBP/USD is currently trading at 1.5050 and is heading upward. You believe that price will continue in this direction if it hits 1.5060.
You can do one of the following to play this belief:
A stop order “stops” an order from executing until price reaches a stop price.
You would use a stop order when you want to buy only after price rises to the stop price or sell only after the price falls to the stop price.
A stop entry order is an order placed to buy above the market or sell below the market at a certain price.
- You place a “Buy Stop” order to buy at a price above the market price, and it is triggered when the market price touches or goes through the Buy Stop price.
- You place a “Sell Stop” order to sell when a specified price is reached.
Current price is the blue dot.In the image above, the blue dot is the current price.
Notice how the green line is above the current price. If you place a BUY stop order here, in order for it to be triggered, the current price would have to continue to rise.
Notice how the red line is below the current price. If you place a SELL stop order here, in order for it to be triggered, the current price would have to continue to fall.
As you can see, a stop order can only be executed when the price becomes less favorable to you.
For example, GBP/USD is currently trading at 1.5050 and is heading upward. You believe that price will continue in this direction if it hits 1.5060.
You can do one of the following to play this belief:
- Sit in front of your computer and buy at market when it hits 1.5060 OR
- Set a stop entry order at 1.5060
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