Trading & MarketsQuestion 104 of 125
A buy stop order is typically used by:
a.An investor seeking to buy below the current market
b.A dividend-focused investor
c.A bond issuer
d.An investor protecting a short position or seeking to buy on upside momentum
Explanation
A buy stop is placed above the current market and triggers when the stock rises to or through the stop price. Short sellers use buy stops to limit losses if the stock rises, and momentum buyers use them to enter once a resistance level is broken.
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