I have a very fundamental question to ask. Can somebody please explain to me the difference between a buy stop and a buy limit, also a sell stop and a sell limit. I use interbankfx on metatrader4. Sometimes when I am trying to place a future order(buy limit or stop) a message will come up saying improper perameters stop loss or take profit. Any help with this would be greatly appreciated. thanks, John
A buy stop is when you set a stop for the amount your willing to lose and the limit is what profit you want to take it at. so say you buy eur/usd at 133.00, your stop must be below because that is the amount you allow yourself to lose if the trade goes against. The limit has to be above because that is the amount you want to make from the trade. So, limit = profit taking amount, and stop = max loss.
shadow thanks for the reply. The thing is, and here is y i am confused. using interbankfx, they have stop loss and take profit. so what u r describing to me seems to be the take profit and stop loss however if u dont want to have an instant execution (market order) then your choice is pending order. So when i click on that it offers me the option of a buy stop or buy limit. I am new to trading and from what I can see I prefer to make a pending order to long or short at an exact price with no slippage and if the market moves in that direction, but what I end up doing is to try buy limt and if it says invalid parameter then I try buy stop and if they dont work i move the pips higher till one of them allows me to do that. To me it is critical to be able to execute the exact order at the exact price that i want. sorry my reply is so long I just need some clarification.
thanks, John
hi johnnyk,
i ran into the same thing when i first started using metatrader
i believe with the “limit” orders you can have pending orders but without any stops or TP’s attached to it. So the only thing you can designate is the price(of course you should be able to modify it later)
the “stop” order types will allow you to do what i think you’re trying to do. you can have a pending order lilke you want but you designate the stops and TP as well all in the initial order…
recap:
limit order - can only place a pending order with the price (but w/no SL or TP)
stop order - pending order with abilility to set SL and TP
ok, ya I was thinking of something else, but what it is is that the buy limits you place below and buy stops you place above the price it is. and sell limits you place above and sell stops you place below the price it is. actually if you go on the tool bar at the top and go to help and search for pending orders, it’ll give you a good explaination.
Thanks i appreciate all the advice. I am going to practice these two order types on my demo. I know where to go when I have more questions. The thing I like about babypips is I can ask “newbie” questions and not feel dumb. Have u ever noticed on those other forums how newbie questions are ignored. It is almost as if people are bothered. So again thanks and good pippin!!!