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A BUY STOP order is a crucial pending order used by traders when they believe that the price of an asset will continue rising after reaching a certain level. This article explains how to place a BUY STOP order on the MT4 and MT5 platforms, complete with a practical example using the GBP/USD currency pair.
Please watch my video about BUY STOP order:
What is a BUY STOP Order?
A buy-stop order is a pending order where a trader places an order to buy an asset above its current market price. The order will only be triggered if the price rises to or beyond the specified level, after which the trader enters an extended position.
For example, if the current price of GBP/USD is 1.2900, but you anticipate that the price will rise after reaching 1.3000, you would place a BUY STOP order at 1.3000. Once the market price hits 1.3000, your BUY STOP order is activated, and you automatically enter the trade at that price or slightly higher, depending on market conditions.
Steps to Place a BUY STOP Order on MT4 or MT5
Placing a BUY STOP order on both the MT4 and MT5 platforms is straightforward. The platforms’ structures are very similar, so the steps work well for either.
Step 1: Open the MT4 or MT5 Trading Platform
Log in to your MT4 or MT5 account. Ensure you have a funded account or use a demo account for practice.
Step 2: Open a New Order Window
- On MT4, you can press F9 or click the ‘New Order’ button in the toolbar at the platform’s top.
- On MT5, click the ‘New Order’ icon or right-click on the asset chart you want to trade (in this case, GBP/USD), and select ‘Trading’ followed by ‘New Order.’
This will open the order window where you can input your trade details.
Step 3: Choose the GBP/USD Pair
In the ‘Symbol’ drop-down menu in the order window, select GBP/USD. This ensures that your trade applies to the correct currency pair.
Step 4: Set Order Type to Pending Order
Under the ‘Type’ section, change the default option from Market Execution to ‘Pending Order.’
Step 5: Select BUY STOP
Choose BUY STOP from the list of pending order options in the’ Pending Order Type’ section.
Step 6: Enter the Entry Price (1.3000)
In the ‘Price’ field, enter the price level at which you want your BUY STOP order triggered. For this example, we will use 1.3000, which means your order will be executed when the GBP/USD pair reaches this level.
Step 7: Specify the Lot Size (Volume)
In the ‘Volume’ field, specify the trade size (the number of lots). For instance, if you want to trade 0.1 lot (equivalent to 10,000 units of GBP/USD), enter 0.1 in this field.
Step 8: Set Stop Loss and Take Profit (Optional)
You can set a Stop Loss (SL) and Take Profit (TP) level when placing your BUY STOP order:
- Stop Loss (SL): This is the price level at which your trade will be automatically closed if the market moves against you. For example, you can set your Stop Loss at 1.2900 to limit your downside risk.
- Take Profit (TP): This is the price at which your trade automatically closes to lock in profits. For instance, you could set the Take Profit level at 1.3200 if you expect GBP/USD to rise that high after reaching 1.3000.
Step 9: Set Expiration (Optional)
You can choose an Expiration Date and Time for your order if you want it automatically canceled if it is not triggered within a specified time. If no expiration is set, the order will remain active until it is executed or manually canceled.
Step 10: Place the Order
Once you’ve entered all the details, click ‘Place’ (MT4) or ‘Place Order’ (MT5) to submit your BUY STOP order. Your order will now appear in the ‘Trade’ tab (MT4) or ‘Toolbox’ tab (MT5) until it is triggered.
GBP/USD BUY STOP Example at 1.3000
Let’s go through a practical example to make this more straightforward:
- Current Price: 1.2900
- BUY STOP Entry Price: 1.3000
- Volume: 0.1 lot
- Stop Loss: 1.2900
- Take Profit: 1.3200
In this example, you expect GBP/USD to rise after it hits 1.3000. Currently, the price is at 1.2900, but you only want to enter the market if it starts moving upward, suggesting a continuation of a bullish trend. You place a BUY STOP order at 1.3000, and when the market reaches that level, your order is automatically executed. If the price rises further, you can take profits at 1.3200. Conversely, if the market reverses after triggering your order, your Stop Loss at 1.2900 will help limit potential losses.
Monitoring and Managing the Trade
Once you’ve placed the BUY STOP order, you can monitor it in the ‘Trade’ tab on MT4 or the ‘Toolbox’ on MT5. If the price rises and hits 1.3000, your order will be executed and become an active position. You can modify or close the order anytime by right-clicking it and choosing ‘Modify’ or ‘Close.’
Why Use a BUY STOP Order?
A BUY STOP order is ideal when you expect an asset to continue rising after surpassing a certain level. It’s commonly used in breakout strategies, where traders anticipate that once the price breaks through a resistance level, it will continue moving upward with momentum.
In our GBP/USD example, you are expecting a bullish continuation beyond 1.3000, and a BUY STOP order ensures you capitalize on that potential movement without constantly monitoring the market.
Conclusion
Placing a BUY STOP order on MT4 or MT5 is a valuable technique for traders who want to enter the market once the price moves above a specific level. It’s particularly effective in trend-following and breakout strategies, allowing traders to automate their entry points and avoid emotional decision-making during fast market movements.
Following the steps outlined in this article, you can easily place a BUY STOP order and take advantage of upward market movements. Whether you’re a beginner or an experienced trader, understanding how to use a BUY STOP order can be valuable to your trading toolkit.
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
