Buy Stop

What Buy Stop means

A buy stop is one of the four standard pending order types and is always placed above the prevailing market price. It rests inactive until the ask trades up to the specified level, at which point it is released as a market order to buy. Traders use it to join upward momentum rather than to anticipate it: the order only becomes live once the market has already demonstrated the move, which is why it is the natural entry for breakout strategies above resistance, a chart pattern neckline or a prior session high.

The order is also created implicitly whenever a short position needs a protective exit, since closing a short means buying. A stop loss on a short position is functionally a buy stop above the entry price. This is why clusters of buy stops accumulate just above obvious highs, and why sharp squeezes often accelerate through those levels as the stops are filled.

Two practical points. First, execution is at market once triggered, so slippage is possible and a breakout that gaps can fill materially above the level. Second, brokers enforce a minimum distance between the current price and any pending order, often called stop level or freeze level, which prevents placing a buy stop only a fraction of a pip above the ask.