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.

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RELATED FAQS
  1. What is the difference between a stop and a market order?

    Learn about market orders and stop orders, how they are used and executed, and the main difference between stop orders and ... Read Answer >>
  2. What is the difference between a stop order and a stop limit order?

    Learn the differences between a stop order and a stop limit order. Traders use these as stop losses and regular investors ... Read Answer >>
  3. How do I place a buy limit order if I want to buy a stock during an initial public ...

    Learn how to place a buy limit order to buy a stock during an IPO. IPOs can be full of risks, and buy limit orders are one ... Read Answer >>
  4. What's the difference between a stop and a limit order?

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  5. What does "gather in the stops" mean?

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