/biz/ - Business & Finance

Tomorrow I have a stop-buy order active for a stock and I figured since I rarely use this type of order I would explain the scenario and strategy for it.

I previously bought TBP (pic related) at 0.69 and 0.72. When it rejected at first resistance of 0.87 I sold, I had a limit order to sell half at 0.87 in case that happened, and decided to sell the remainder of my position before close on Friday. Betting the price would retrace some after three consecutive days of decent gain. It's possible this was just an oversold bounce and I tend to lean towards that interpretation for now. However, I don't know what it was or whether this stock will remain bullish so: enter the stop-buy order.

I don't want to buy at current range as there is no confirmation of bullish sentiment shift. My stop-buy is set at 0.88, meaning I want to buy back in to this stock if and only if it breaks 0.87 resistance. A limit order in this situation would fill at 0.88 and any price below that because that's how limit orders work. Stop order buy, on the other hand, does not go live unless the price hits 0.88.