A buy-stop order is placed at a price that is higher than the current market price. A buy-stop order is typically used by investors to limit a loss or protect a profit on a stock that they have sold short. A sell-stop order is placed at a price lower than the current market price. A sell-stop order is typically used by investors to limit a loss or protect a profit on a stock they own.

A buy stop order is a type of order used in trading to purchase an asset once its price reaches a specified level above the current market price. It is designed to limit losses or capitalise on potential upward breakouts. For example, if a stock is trading at $50 and a trader sets a buy stop order at $55, the order is triggered only when the price hits or exceeds $55, converting into a market order to buy at the best available price. This strategy is commonly used to enter a rising market or to protect against short positions by covering losses if the price moves unfavourably. Buy stop orders help traders automate their strategies, ensuring timely execution without constant market monitoring. However, they carry risks, such as slippage, where the execution price may differ from the stop price due to rapid market movements.