Buy Limit: Buying the Dip
A buy order placed below the current price: wait for the price to dip somewhere cheaper, then buy, expecting a bounce.
Risk warning: forex, CFDs, options, futures and crypto assets usually involve leverage or high volatility, and you can lose more than you put in. This lesson only teaches the concepts; all numbers are for illustration and are not investment advice.
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Text version · Forex: Pending Orders & Risk, lesson 2: “Buy Limit: Buying the Dip”
A buy order placed below the current price: wait for the price to dip somewhere cheaper, then buy, expecting a bounce.
Wait to buy cheaper
A Buy Limit sits below the current price. You think price will dip here first and then bounce, so you get in at a lower level.
If price doesn't come back
If price rises steadily and never dips to the order price, the Buy Limit never fills. You just miss out; you don't lose money.
Often placed near support
Price is at 1.0850, and 1.0820 below is support: place a Buy Limit around 1.0822 with the stop-loss below support. Place it too deep and it may never fill.
Key takeaways
- A Buy Limit sits below the current price, often near a support level.
- You expect the price to dip to your order price first, then bounce back up.
- If the price rallies and never comes back, the Buy Limit never fills. You miss the move, but you don't lose money.
Try it yourself
You can do these exercises in this lesson's interactive simulation:
- Press ▶ to play the default "Dip, then bounce" scenario, find the point where the order fills, and note the floating P&L afterwards.
- Move the order price from −25 to −50 pips and play again: placed that deep, does it still fill?
- Switch to the "Breakout up" scenario and watch the Buy Limit wait in vain.
- Drag the order line above the current price and see why it's marked invalid.
Quiz and explanations
- 1. Where should a Buy Limit be placed?
- Answer: Below the current price.Buy Limit = wait until it's cheaper, then buy.
- 2. The price is 1.0850 and you think it will dip to 1.0820 before bouncing. What should you place?
- Answer: Buy Limit 1.0820.Buying at a lower price below and expecting a bounce → Buy Limit.
- 3. You place a Buy Limit at 1.0820. The price falls to 1.0815, then rises to 1.0870. Ignoring the spread, what's your fill price and unrealized gain now?
- Answer: 1.0820, +50 pips.The order fills at its price as soon as the price touches 1.0820 on the way down; 1.0870 − 1.0820 = 50 pips.