A Buy Stop Order is an order to buy a stock at a price
above the current market price. Once a stock's price trades
at or above the price you have specified, it becomes a Market
Order to buy.
Example: Suppose you are looking to buy 100 shares
of Intel (INTC) if the stock's price shows that it wants
to go up. Assume INTC is currently trading at $20 per share
and you believe that if the price rises to $22 or higher
there will be continued upward momentum. You place a Buy
Stop Order @ $22 on INTC.
Suppose INTC then proceeds to trade up to $22.
At that time, your order would become a Market Order to
buy and your order would be filled at the next best available
The main benefit of a Buy Stop Order is that you will only
purchase the stock IF the price is showing upward momentum.
But, if the stock price reaches your stop price, the stock
may change direction to the downside and you may have just
purchased the stock at its high. Also, once your stop price
is reached and your order becomes a Market Order to buy,
you may be filled at a price higher or lower than your stop