A limit order is unsuccessful if the underlying commodity price leaps above the entry price and traders. That is since the cap price is the highest cost the buyer is able to spend. In addition, it is now below the average level in this situation.
A buy stop order is a type of order that converts into a market order. After that, it has exceeded the specified stop price.
If you grasp two types of orders: buy stop order and buy-stop-limit order you can reduce the risk of this scenario happening again.
What a Buy Stop Order is
A buy stop order is a form of order that has been turned into a market order until the given stop price is reached.
Let’s say XYZ Company’s current price is $12.86 and it looks as if it’s set to go higher. With the stop price set at $13.01, you might want to place a buy stop order. If the share price rises past $13.01 this order will switch to market order.
Sadly, if the price goes significantly higher, you run the risk of being loaded up. It goes to an unreasonable point to the market price.
Using a buy-stop-limit order is a way you can reduce the risk of having a bad fill and restrict the price charged for the asset.
A buy-stop-limit order is similar to the buy-stop order. The exception is that a cap price is always set as the investor’s willing to pay the full cost.
Take an example, that XYZ Corporation places a buy-stop-max order with a stop price at $13.01. Then, a maximum price sets at $15.
When the demand increases to $17, your order will not be filled out because you mentioned that you don’t want to spend more than $15. For example , consider that XYZ Corporation orders a buy-stop-load order for a $13.01 stop price and a $15 load.
When the price jumps to $17, the order would not be filled out because you indicated the you will not pay more than $15.
Using the buy stop order and buy-stop-limit order will allow you to buying the stock in the stock market. It goes to at the rates you see value at. When you are familiar with these types of orders, you can maximize the possibility of loading in your orders where and how you expect them to be filled up.