Stop Buy
What is a stop buy order?
A buy stop order tells a broker to buy a security when its price reaches a certain level. When the price reaches that point, the buy stop changes into a limit or a market order that can be filled at the following price.
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Video: Stop Buy at 8 min 04 sec.
Stocks, futures, forex, or a number of other trading products may be subject to this kind of stop order. With the underlying assumption that a share price that rises to a given height will continue to rise, the purchase stop order can be used for a variety of purposes.
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Let's say you want to buy shares of Apple (AAPL) in case they brake a certain resistance level you identified at $120. You place a Stop Buy order at $120.50. If the share price hits $120.50, your broker will immediately purchase shares for you at the market price.