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A stop order is a pending order that triggers when the price reaches a specified level in the direction of the anticipated move. A buy stop is placed above the current price, triggering when the price rises to that level — used to enter on a breakout. A sell stop is placed below the current price, triggering when the price falls to that level. Once triggered, a stop order becomes a market order and is filled at the next available price. A stop limit order is a variant that places a limit order instead.
EUR/USD is trading at 1.1050 and approaching resistance at 1.1080. You expect a breakout, so you place a buy stop at 1.1085. If the price breaks through resistance and hits 1.1085, your buy order activates automatically, entering you into the breakout move.
