What is a stop order?
Stop order - a type of pending stock exchange order to buy above the current level (Buy Stop) or below the current price (Sell Stop). These orders are set most often at strong, significant levels in order to make a profit even when the trader is not near the terminal.
Data on stop orders are stored on the server of the broker or DC, so there is no need to leave the terminal on.
What is the difference between a limit and a stop order?
The difference between a limit and a stop order is the price at which the order will be opened:
Stop order - it is a transaction at a price ALWAYS worse than the price at the moment of order installation. That is, to sell at a price lower than at the moment of installation of the order and to buy at a price higher than at the moment of installation of the order. To put it simply, the BuyStop order is always above the current price, the SellStop order is always below the current price.
Limit order- it is a transaction at a price ALWAYS better than at the moment of warrant installation. That is, to sell at a price higher than at the moment of installation of the order, to buy at a price lower than at the moment of installation of the order. To put it simply, the order BuyLimit is always under the current price, the order SellLimit - above the current price.
How do I use a stop order?
Trading with the use of stop orders gives the trader some insurance against the fact that the price will go in a different direction than expected.
It is worth noting that MetaTrader 4 terminal is arranged in such a way that you simply can not mix up the orders when installing, the terminal simply will not let you set, for example, SellStop order above the current price.
No broker charges absolutely no commission for the installation, modification or deletion of a pending order.
Read more about types of pending orders, how to set them and how to trade with pending orders in this article.