Buy stop

Very often when trading Forex, it seems to you that if the rate reaches a certain point, then after that its growth will certainly continue. Placing a pending buy stop order will help you catch this moment.

Buy stop is one of the pending orders, which allows you to open a buy position at a price higher than the existing one.

Forex terms such as buy stop relate directly to trading techniques, as they help organize the process of exchange trading.

This order is mainly used in trend trading, in situations where the possibility of a breakout of the resistance line or one of the important price levels is predicted.

The use of a buy stop is based on the theory that the trend will continue after a breakout has occurred; as a rule, the breakout is caused by an important event that has a positive effect on the exchange rate.

Buy stop installation example.

At the moment, an upward trend dominates the market, the price is confidently moving upward, now its value is 1.3485.

The nearest significant level is the indicator of 1.3500, it is at this point that we place our pending order (in practice, it is recommended to add 5-10 points to the level). Take profit - set at 1.3550.

Stop loss - set below the breakout point at 1.3490, in case our forecast does not come true and the breakout turns out to be false. You can independently choose more appropriate stop loss values ​​depending on your situation.

After some time, the position was opened, and after another two hours the position was closed when the take profit .

The support line or other level options can also be used as a basis for searching for buy stop installation points.

Forex strategies built on the basis of this order are among the simplest and at the same time effective in the foreign exchange market. To use it, you need to use additional indicators, perhaps to build a support line.