A buy stop order executes a market buy order if and when an asset’s price rises to a specified trigger price. This is different than a stop-loss, which executes a market sell order if and when an asset’s price drops to a specified trigger price. A buy stop order is the “opposite” of a stop-loss order.
How to place a buy stop order
On the orderbook, select the asset pair you want to trade
Select “Advanced” under the “Buy” tab in the order form
Select “Stop” from the “Algorithm” dropdown
Set your Trigger Price [this price must be above the market price]
Select a “Buy Total”
Submit your order with the “Buy” button
Example Uses
Breakout strategy - Common for funds and traders driven by technical analysis or momentum.
The basic idea behind this strategy is that an asset that is trading within certain support and resistance levels has the potential for a significant rise or dip in price in the event that it “breaks out” beyond those levels of resistance and support.
Risk-Management on Short Positions - Buy stop orders are particularly useful as a risk-management tool for traders and funds who short the market.
If a trader were short and wanted to protect their downside, they could set a buy stop order above a certain threshold in order to take on a long position if the asset’s price started to move significantly against their short position.