Im a bit confused. lets say current price is 1000 and i place a sell limit order to be filled at 900 i am predicting that the price will hit 900 and then bounce back upward - is this correct ?
If that is correct am i not effectively buying at 900. Can i not just place a buy stop order at 900
If you are expecting the price to go down, then back up, you would want a buy limit order at 900. A buy stop order would be used if you want to buy it at a price [I]higher[/I] than the current price. You cannot place a buy stop for a price lower than what it currently is.