Example of a buy limit and a buy stop?
buy stop = price is on uptrend/buy now and we think that the uptrend will be continuing "continuing buy" ("buy and continue buy").
buy limit = "sell and continue buy"
https://www.metatrader4.com/en/trading-platform/help/positions/orders
and
https://www.metatrader5.com/en/terminal/help/trading/performing_deals
- www.metatrader4.com
Yes I've read those descriptions but they don't make sense to me as a newbie trader.
Example:
Buy Limit – buy provided the future "ASK" price is equal to the pre-defined value.
How does anyone know what the future price will be? I don't see a future price property to specify in the MqlTradeRequest structure.
What does the "pre-defined value" represent?
I'm trying to write an example in plain English of what this type of buy would look like:
To the broker: "I want to buy 100 shares (one Lot) of company xyz stock for $200.00 (Ask price) but I'm adding a Buy Limit to my order in the amount of $210.00. Therefore, execute this buy order only if the future stock price hits $210.00" ???
How far off the mark am I in understanding this Buy Limit term?
Thank you...
- www.mql5.com
I've read about Buy Limits and Buy Stops but I'm having trouble putting that information into an example in my mind.
Can someone give me an example of a Buy Limit order vs a Buy Stop order?
Thank you...
Buy Stop = You want to buy at a price which is above the current market price
Buy Limit = You want to buy at a price which is below the current market price
Sell Stop = You want to sell at a price which is below the current market price
Sell Limit = You want to sell at a price which is above the current market price
Buy Stop Limit = A Buy Limit Will be Placed when a level which is currently above market price is reached
Sell Stop Limit = A Sell Limit Will be Placed when a level which is currently below market price is reached
Think of the price like a ping pong ball.
When you hear limit think "paddle" (bounces off)
When you hear stop think "net" (goes beyond)
This might Help .
OK, so here is my plain English example:
Buy Order using Buy Stop and Buy Stop Limit
Xyz company stock currently trading at $18.00 per share.
"Buy 100 shares of xyz company for $16.00 a share (this is the Buy Stop) and limit the buy to no more than $17.00 (this is the Buy Stop Limit)".
The order is triggered when/if the stock hits $16.00 and then becomes a limit order.
Sell Order using Sell Stop and Sell Stop Limit
Xyz company stock currently trading at $18.00 per share.
"Sell 100 shares of xyz company for $20.00 a share (this is the Sell Stop) and limit the sell to no less than $19.00 (this is the Sell Stop Limit)".
The order is triggered when/if the stock hits $20.00 and then becomes a limit order.
OK, so here is my plain English example:
Buy Order using Buy Stop and Buy Stop Limit
Xyz company stock currently trading at $18.00 per share.
"Buy 100 shares of xyz company for $16.00 a share (this is the Buy Stop) and limit the buy to no more than $17.00 (this is the Buy Stop Limit)".
The order is triggered when/if the stock hits $16.00 and then becomes a limit order.
Sell Order using Sell Stop and Sell Stop Limit
Xyz company stock currently trading at $18.00 per share.
"Sell 100 shares of xyz company for $20.00 a share (this is the Sell Stop) and limit the sell to no less than $19.00 (this is the Sell Stop Limit)".
The order is triggered when/if the stock hits $20.00 and then becomes a limit order.
Nice : i see
Xyz is at $18.00 ,each example is independent :
- if you want to buy 100 shares when the price falls to $16.00 you place a Buy Limit [because you expect it to bounce up after reaching $16].
So the market goes from $18.00 to $19.00 and then to $16.00 ,the broker buys 100 shares for you. - if you want to buy 100 shares when the price rises to $20.00 you place a Buy Stop [because you expect it to keep going over $20 if it reaches there]
So the market goes from $18.00 to $20.00 ,the broker buys 100 shares for you. - if you want to buy 100 shares when the price falls to $16.00 ,but you have a condition ,you want it to have hit at least $20 from the moment we are now (not anytime) [for reasons resulting from your analysis] you will place a buy stop limit with price $20.00 <-the condition price ,and stoplimit price of $16.00 .
What happens in this case is when the market goes at $20.00 ,then a buy limit order will be placed at $16.00
(case a : ) the market goes from $18.00 to $19.00 and then down to $16.00 ,nothing happens.
(case b : ) the market goes from $18.00 to $21.00 and then down to $16.00 ,your broker buys 100 shares for you.
Nice : i see
Xyz is at $18.00 ,each example is independent :
- if you want to buy 100 shares when the price falls to $16.00 you place a Buy Limit [because you expect it to bounce up after reaching $16].
So the market goes from $18.00 to $19.00 and then to $16.00 ,the broker buys 100 shares for you. - if you want to buy 100 shares when the price rises to $20.00 you place a Buy Stop [because you expect it to keep going over $20 if it reaches there]
So the market goes from $18.00 to $20.00 ,the broker buys 100 shares for you. - if you want to buy 100 shares when the price falls to $16.00 ,but you have a condition ,you want it to have hit at least $20 from the moment we are now (not anytime) [for reasons resulting from your analysis] you will place a buy stop limit with price $20.00 <-the condition price ,and stoplimit price of $16.00 .
What happens in this case is when the market goes at $20.00 ,then a buy limit order will be placed at $16.00
(case a : ) the market goes from $18.00 to $19.00 and then down to $16.00 ,nothing happens.
(case b : ) the market goes from $18.00 to $21.00 and then down to $16.00 ,your broker buys 100 shares for you.
Super old thread that i came across looking for something else.. Lorentzos as you've helped me so much i feel i should correct a mistake you've made here (although chances are you may now know the correct usage anyway - still, helpful for others..).
A buy stop limit is not as you say it is.. The limit part is used to 'limit' the purchase price of the buy-stop trade. That is, say you're expecting positive news on a stock but are unsure, you may enter a buy-stop to purchase it above a certain price. A buy stop limit however puts a limit on the maximum price you are willing to pay for it. For example, company XYZ is trading at $10 and has earnings out after hours. Its ultra positive, so your buy-stop triggers at $11, with your limit of $12. What this means is at $11 your order doesn't turn into a market order, it instead turns into a buy order with a limit price of $12, therefore purchasing all available stock from $11 up to that price but not above. Its used in this example to prevent you paying up some crazy price if it spikes without you being filled near your buy-stop price.
Super old thread that i came across looking for something else.. Lorentzos as you've helped me so much i feel i should correct a mistake you've made here (although chances are you may now know the correct usage anyway - still, helpful for others..).
A buy stop limit is not as you say it is.. The limit part is used to 'limit' the purchase price of the buy-stop trade. That is, say you're expecting positive news on a stock but are unsure, you may enter a buy-stop to purchase it above a certain price. A buy stop limit however puts a limit on the maximum price you are willing to pay for it. For example, company XYZ is trading at $10 and has earnings out after hours. Its ultra positive, so your buy-stop triggers at $11, with your limit of $12. What this means is at $11 your order doesn't turn into a market order, it instead turns into a buy order with a limit price of $12, therefore purchasing all available stock from $11 up to that price but not above. Its used in this example to prevent you paying up some crazy price if it spikes without you being filled near your buy-stop price.
Hmm that sounds reasonable . So it essentially will buy only in that range until your volume is filled (in this example) . Thank you for the clarification 🙂
The documentation offers this explanation though :
ORDER_TYPE_BUY_STOP_LIMIT Upon reaching the order price, a pending Buy Limit order is placed at the StopLimit price
Hmm that sounds reasonable . So it essentially will buy only in that range until your volume is filled (in this example) . Thank you for the clarification 🙂
The documentation offers this explanation though :
Technically not just in that range as it could buy lower than the trigger price (after it's been triggered, of course) - in the example $11, so theoretically you could get some fills sub $11, but in practice that's very unlikely to happen as it requires a large simultaneous sell order to push against your buy order (and the positive news flow).
The documentation is correct, it's just the wording that makes it seem complicated - to clarify using my example;
ORDER_TYPE_BUY_STOP_LIMIT Upon reaching the order price ($11), a pending Buy Limit order is placed at the StopLimit price ($12)
Having used them 100's of times in my professional career this is 100% how they work, and yes - it does feel good to finally impart some of my own wisdom on this forum :)
Technically not just in that range as it could buy lower than the trigger price (after it's been triggered, of course) - in the example $11, so theoretically you could get some fills sub $11, but in practice that's very unlikely to happen as it requires a large simultaneous sell order to push against your buy order (and the positive news flow).
The documentation is correct, it's just the wording that makes it seem complicated - to clarify using my example;
Having used them 100's of times in my professional career this is 100% how they work, and yes - it does feel good to finally impart some of my own wisdom on this forum :)
Thank you 👍
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I've read about Buy Limits and Buy Stops but I'm having trouble putting that information into an example in my mind.
Can someone give me an example of a Buy Limit order vs a Buy Stop order?
Thank you...