When to buy limit and when to buy stop?

Azlan00IM

Private
Messages
33
When trading with demo account, I noticed a few things. If I choose buy stop, I might lose hundreds of pips because I entered the trade late. However, I will avoid from the risk of hitting stop loss in case the price changes direction. If I choose buy limit instead, I will gain hundreds of pips because I entered the trade earlier, but if somehow the price changes direction, I will be hitting stop loss. So, I want to know, when is suitable to choose buy limit and when to choose buy stop?
 

Pharaoh

Colonel
Messages
19,771
First, don't put in a buy stop hundreds of pips above the current price. The idea of a buy stop is that if price rises to X, you expect the price to continue upwards. If that's hundreds of pips away, unless you are doing some VERY long term trading, why not look for other possible entries in the meantime?

A buy limit is when you expect price to drop and bounce off a support level. If that level is hundreds of pips away and you think there's a good chance price will go down and bounce, why not sell now and reverse your order if price follows the path you expect?
 

Mneri

Private
Messages
18
The main thing is that you do not give up stop-loss in principle, because now they are called to provide freedom of action in the market and suggest not to use stop-loss at all. In my opinion, this is a real sacrilege, which will lead to the fact that traders will work for good luck or will experience too much excitement if something goes wrong...
 

Talar

Private, 1st Class
Messages
44
It is good that you are interested in such questions, now many traders somehow neglect the use of stop-loss, which is the best insurance in the market, especially for a trader with little experience and incomplete understanding of the market.
 
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