# Correct way of using "Buy-stop-limit" to purchase stocks when price goes below a value

I see everywhere explanations of "sell-stop-limit" (to sell your stocks) and I found an explanation of "buy-stop-limit" for when you want to buy stocks once the value starts rising. However I don't understand how to use it when I'm looking to buy after the price went down.

For example, let's say a stock valued at 102\$ on the market that I want to buy when it reaches 100\$. My bank requires both "stop" AND "limit" values when I use the buy-stop function. So I suppose I should set stop=98\$ but I don't know what impact will the limit value have.

• With stop=100\$ and limit=101\$

Will it trigger once it goes below 100\$ but not buy if it goes back up above 101\$ when order passes ?

• With stop=100\$ and limit=98\$

Will it trigger once it goes below 100\$ but not buy if it reached less than 98\$ when order passes ?

• Or am I completely wrong and a buy-stop value only trigger on the way up (from 99.99\$ to 100\$, but not from 100.01\$ to 100\$)?

A buy stop order is an order where you buy if price moves above the current price. Here's an example.

If XYZ is \$102 and you want to buy it at \$100 then just place a limit order.

Conditional orders can be used for more complex orders, if your broker offers them.

• Thanks for that! I thought only buy-stop orders were "triggered". Didn't know that limit-orders were also triggered once the price went down, thought it was just a failsafe and the order was canceled if the price was higher than when the order was requested! Commented Jan 10, 2022 at 5:28

A limit defines the most you want to pay for the stock. If there is a stock that's at \$102 and you are willing to buy it for \$100 or less, then a plain limit order will do that.

But is sounds like you want to buy at \$100 only if it goes below \$100 and comes back up which is not common.

For a buy, a "stop" defines a trigger price that the stock must go above to execute. They're traditionally called "stop-loss" orders, and more commonly used to sell meaning you want to "stop the bleeding" and sell when the price hits a price reflecting the most you want to lose. For a buy it would be used to stop losses on a short position, meaning you want to sell if the price goes above a certain amount (stopping your losses on a short).

There's not (to my knowledge) a common order type to trigger a buy if a stock rises. Why would you want to but it at a higher price that you can now?

You may need to see if your broker supports custom conditional orders to do what you want.

• Thanks, very useful answer and it's solid clear knowledge that "limit" is always the most I want to pay for, whether it's a limit-order or a buy-stop-limit order. I accepted the other answer as it was posted first but both your answers are exactly what I needed. Commented Jan 10, 2022 at 5:25
• Actually mine was posted first :) but that's ok - I'm not concerned about rep at this point. Glad it helped. Commented Jan 10, 2022 at 14:32