Buy Stops Above


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.

BREAKING DOWN '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.

  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop ...
  2. Buy Stop Order

    An order to buy a security which is entered at a price above ...
  3. Stopped Out

    The execution of a stop-loss order. Stopped out refers to when ...
  4. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of ...
  5. Stop Order

    An order to buy or sell a security when its price surpasses a ...
  6. Long (or Long Position)

    1. The buying of a security such as a stock, commodity or currency, ...
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