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Definition of 'Buy Stops Above'
A recommendation to buy a specific security when a the security's price exceeds a certain level of resistance by placing a buy stop order at that level of resistance. The trader's belief is that a good buying opportunity is present when the level of resistance has been breached and that upward momentum will prevail once the price moves beyond the barrier.
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Investopedia explains 'Buy Stops Above'
For example, suppose a trader believes that, if the price of XYZ stock breaks above of $10, it will continue heading higher. This trader would likely choose to place a buy stop order at $10.01. This type of order turns into a market buy order once the level of resistance of $10 is breached and gives the trader exposure to capture further upward momentum.
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