DeutschWhat is a Buy Stop Order?
A buy stop order is an order to buy a security at a price above the current market price.
Explanation:
This order type is used to limit a loss or protect a profit on a stock that has been sold short. It becomes a market order once the stop price is reached.
Practical Example of Buy Stop Order:
If an investor short-sells a stock at $100, they might set a buy stop order at $110 to limit potential losses if the stock price rises.
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