A buy limit is a type of pending order that is used to buy a financial instrument, such as a stock or currency pair, only at a specific price. 

For example, suppose XYZ stock is trading at $100 per share and a trader wants to buy the stock only once it reaches $95. In this case, they would set a limit buy order at $95 and wait for the stock to reach the desired price. 

If the stock price reaches $95, the order will be executed. If the price does not reach $95, the order will remain pending for its initial duration (until the end of the trading session, or until the trader manually cancels it). 

It is important to consider that limit orders have no guarantees of being executed, as the instrument might never reach the desired price point at all. This is one downside to using limit buy orders and requires traders to set limit prices at reasonable levels to ensure order execution. 

Another consideration is the practical aspect of using limit orders. When placing a limit order, the brokerage will lock the funds required for the execution of said order, as well as any commissions that apply to the trade. When opening positions of large sums, it is best to choose different limit prices with narrow intervals to make sure the desired number of shares are bought using the buy limit orders, as large trades can affect the price of stocks with subpar liquidity and price a portion of the pending order out of execution. 

A buy stop order is a type of pending order that instructs the broker to buy an instrument at the specified price or higher. For example, for a trader that wants to buy a stock that is trading at $100 and wants to buy when the price reaches $105 or higher, they can place a buy stop order and wait for the price to reach their desired target for the order to be executed. 

If the price does reach $105, the order will be executed and the broker will buy the predetermined number of shares at that price. If the price does not reach $105, the order will remain pending until it has been canceled. 

The idea behind buy stop orders is to take advantage of rising price momentum in an instrument and buy before it reaches its peak and sell before the trend reverses. However, it must be noted that such a trading strategy can be unreliable, and much like buy-limit orders, buy stop orders also have no guarantees of execution. Buy stop orders give traders the freedom to buy at their desired price without the need to constantly monitor the market, but they also come with a caveat, and beginner traders need to take this into account when placing orders. 

Now that we have overviewed what buy limit and buy stop orders are individually, we can compare the two and identify the key differences between them to figure out how to get the most out of each. 

The key differences between buy limit and buy stop orders are:

• Direction - Buy limit orders choose a limit price at which to buy the instrument and this price is fixed and non-negotiable. If the instrument does not reach the limit price, the order will not be executed. A buy stop order, on the other hand, chooses a specific price point and buys at that price, or higher - giving traders more room for error in their pending orders. This is to account for sudden momentum shifts in the price of a security to time the market and guarantee execution if the price reaches the desired target
• Use - Buy limit orders are often used in accordance with valuation tools to buy the instrument at the most reasonable price and make the most out of price growth. Buy stop orders try to take advantage of upwards momentum by allowing a small margin of error on each pending order 

Knowing these key differences can help traders understand when to use buy limit and buy stop orders on the market. 

• Traders can choose between several pending orders when executing transactions on the market
• Buy limit and buy stop orders are both types of pending orders that involve setting a specific price point at which the broker buys an instrument
• A buy limit order is only executed if the price of an instrument reaches the limit point
• A buy stop order is executed if the price of an instrument reaches the stop price or higher 
• Neither of the two order types guarantees execution and will remain open until canceled 
• Buy limit and buy stop orders are great tools for traders who use valuation techniques to pick buying prices to enter the market