Why there is difference between buy limit and buy stop? | Forex Factory

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Why there is difference between buy limit and buy stop?

  • #1
  • First Post: Mar 30, 2010 12:39pm Mar 30, 2010 12:39pm
I know that buy limit is put below the price and buy stop is above it? Why it doesnt have a single name?? When price reaches certain price it execute the buy order?? I am also very confused about market gaps on holidays and these types of orders , so please help.
  • #2
  • Mar 30, 2010 2:10pm Mar 30, 2010 2:10pm
Think of it like an orange, mo
  • #3
  • Mar 30, 2010 6:36pm Mar 30, 2010 6:36pm
When you will get an alert on your cell phone, it should say reached BUYLIMIT or BUYSTOP.
What exactly unclear for you about gaps?
  • #4
  • Mar 30, 2010 6:47pm Mar 30, 2010 6:47pm
I asked this question once myself. Think of it like this (I still have it printed out and taped to my old monitor)

Pending Orders

Buy Stop = Going LONG once price comes UP to hit the entry
Buy Limit = Going LONG once price comes DOWN to hit the entry price
Sell Stop = Going SHORT once price comes DOWN to hit the entry
Sell Limit = Going SHORT once price comes UP to hit the entry price
  • #5
  • Mar 31, 2010 10:18am Mar 31, 2010 10:18am
Quoting traderjai_inhi
I asked this question once myself. Think of it like this (I still have it printed out and taped to my old monitor)

Pending Orders

Buy Stop = Going LONG once price comes UP to hit the entry
Buy Limit = Going LONG once price comes DOWN to hit the entry price
Sell Stop = Going SHORT once price comes DOWN to hit the entry
Sell Limit = Going SHORT once price comes UP to hit the entry price
I know this. But can't you notice that the buy order is excuted when "PRICE HITS ENTRY" as you said now?
My question is why different nomenclature between the 2 orders.
  • #6
  • Mar 31, 2010 12:48pm Mar 31, 2010 12:48pm
A buy stop you would use on a breakout trade. whereas a buy limit you would use if you were looking for the pair to bounce off a certain level but continue going long after the retracement.

Dont make it harder then it has to be.
  • #7
  • Apr 1, 2010 1:32pm Apr 1, 2010 1:32pm
Quoting Brb-Fraudin
I know that buy limit is put below the price and buy stop is above it? Why it doesnt have a single name?? When price reaches certain price it execute the buy order?? I am also very confused about market gaps on holidays and these types of orders , so please help.

hey

you may check this posts made by the man himself = Merlin

hope it helps

http://www.forexfactory.com/showpost...37&postcount=3
http://www.forexfactory.com/showpost...27&postcount=2
  • #8
  • Apr 1, 2010 4:16pm Apr 1, 2010 4:16pm
Quoting Brb-Fraudin
I know that buy limit is put below the price and buy stop is above it? Why it doesnt have a single name?? When price reaches certain price it execute the buy order?? I am also very confused about market gaps on holidays and these types of orders , so please help.

stop are supposed to be traded through, limits are traded against. think of it like trading bounces and breakouts with support and resistance. placing a buy stop is like trading a break of resistance. placing a buy limit is like trading a bounce off of support.

market gaps occur becuase there is still trading going on in the off period, usually through literal exchange companies and banks. we just cant see it cuz we dont have access to it. we dont see what happens in between, just the beginning and end. to us it looks like a gap, but to others it doesnt. sometimes, on DBFX charts, you can actually see the off-hours trading going on, but cant trade it.
  • #9
  • Apr 1, 2010 4:33pm Apr 1, 2010 4:33pm
Quoting Brb-Fraudin
I know this. But can't you notice that the buy order is excuted when "PRICE HITS ENTRY" as you said now?
My question is why different nomenclature between the 2 orders.
Go to this link as Investopedia explains all these terms.

Remember that the terms used in the Spot/Retail market aren't exactly the same as used elsewhere ie futures etc.

A Stop order tells the borker to place your trade into the market (ie it becomes a market order) and unless you cover yourself by stipulating a maximum deviation from the price your Stop was placed at then you could end up with whatever price the borker can get taken on the other side.

A Limit should be filled only at the price indicated OR better; this isn't the case with a Stop (market) order.

When you're dealing in pennies and cents this won't normally be a problem; start going in with large positions with standard lots and you may be in for a few surprises if you don't know what you're doing. But I suspect that's not a problem for you at the moment .
  • #10
  • Apr 1, 2010 5:26pm Apr 1, 2010 5:26pm
Also, there are Buy Stop-Limit
and Sell Stop-Limit
  • #11
  • Oct 26, 2010 1:46pm Oct 26, 2010 1:46pm
Hi All,

I have quick question which probably has a very simple answer.

I am looking to set a pending order for a trade however I have the following problem.

http://i52.tinypic.com/6ht1uh.png

I am trying to set a pending order - price is currently where the number 1 is on the chart - above the red line

The red line is representing where I wish to buy - however I dont want my buy order executed until point 2, when price is underneath the red line

Is there a way of setting a pending order for this type of trade?

The reason I want to implement it this way is because I am often not at the computer to wait for price to break through the red line and then set my pending order for a long position.

I hope this makes sense!

Many Thanks,

TheDell
  • #12
  • Edited 10:59pm May 29, 2011 10:57pm | Edited 10:59pm
Quoting traderjai_inhi
I asked this question once myself. Think of it like this (I still have it printed out and taped to my old monitor)

Pending Orders

Buy Stop = Going LONG once price comes UP to hit the entry
Buy Limit = Going LONG once price comes DOWN to hit the entry price
Sell Stop = Going SHORT once price comes DOWN to hit the entry
Sell Limit = Going SHORT once price comes UP to hit the entry price
clear and to the point.thanks
  • #13
  • Jun 12, 2013 8:09pm Jun 12, 2013 8:09pm
Quoting Tokolosh
{quote} clear and to the point.thanks
yup.. very straight to the point. just take 1 sec to understand it
  • #14
  • Jun 25, 2013 6:28am Jun 25, 2013 6:28am
Now that you know the buy limit is below and the buy stop is above, the reason they do not have the same name is because they serve different purpose thats all.
  • #15
  • Jun 25, 2013 7:55am Jun 25, 2013 7:55am
This is a really useless thread. If someone wants to know the difference btw BL and BS make sense.

But this thread is about why two different names for two different concepts. :nerd:

  • #16
  • Jul 4, 2013 12:40am Jul 4, 2013 12:40am
Quoting Alanamc
This is a really useless thread. If someone wants to know the difference btw BL and BS make sense. But this thread is about why two different names for two different concepts. :nerd:
don't say like that. this is a great of thread especially for newbies who doesn't now it
  • #17
  • Jul 4, 2013 4:39am Jul 4, 2013 4:39am
Quoting Masta Forex
{quote} don't say like that. this is a great of thread especially for newbies who doesn't now it
Yeah, it maybe difficult for many newbie to understand that, though we think it's a common sense.
I think we can think from the origin of the two concept, which would help us to understand them.
  • #18
  • Jul 4, 2013 8:10am Jul 4, 2013 8:10am
Quoting eleva_urune
{quote} Yeah, it maybe difficult for many newbie to understand that, though we think it's a common sense. I think we can think from the origin of the two concept, which would help us to understand them.
Agree mate.
  • #19
  • Sep 30, 2013 9:02pm Sep 30, 2013 9:02pm
Also, Stops are frequently used to exit a trade (ie StopLOSS).
Limits are used to TakePROFIT.
  • #20
  • May 19, 2018 9:31pm May 19, 2018 9:31pm
Quoting Brb-Fraudin
I know that buy limit is put below the price and buy stop is above it? Why it doesnt have a single name?? When price reaches certain price it execute the buy order?? I am also very confused about market gaps on holidays and these types of orders , so please help.
With buy limit you can get positive slippage.
With buy stop you can get negative slippage.

Positive slippage means you could get a cheaper price when the buy limit is executed hence potentially more profit
For sell limit positive slippage means you get higher/expensive price when sell limit gets executed hence more profit.

Negative slippage means that you could get an expensive price when the buy stop is executed hence you could have less profit or potentially big loss.
Sell stop negative slippage means you get lower price when sell stop is executed hence less profit or could lead to a loss. Loss usually happens when you get bad price for your oeder and the market turns out to be a fake breakout or reversed direction.
This is not investment/trading advise. Will not hold accountable for loss
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