What is ‘Hard Stop’
A price level that, if reached, will trigger an order to sell an underlying security. Hard stops are set at a constant price and are inherently good until cancelled. A hard stop is used to protect the downside of holding an investment by always being active, and is only triggered once the price reaches the specified stop level.
Explaining ‘Hard Stop’
A hard stop is placed in advance of an adverse move and remains active until the price of the underlying security moves beyond the stop level. Many traders will choose to set a hard stop once the price of their investment becomes profitable and will leave the order active until it reaches the price target.
Further Reading
- Innovation and bureaucracy under soft and hard budget constraints – academic.oup.com [PDF]
- Unintended effects of a computerized physician order entry nearly hard-stop alert to prevent a drug interaction: a randomized controlled trial – jamanetwork.com [PDF]
- Sudden stop, financial factors and economic collpase in Latin America: learning from Argentina and Chile – www.nber.org [PDF]
- Micro-finance evangelism,'destitute women', and the hard selling of a new anti-poverty formula – www.tandfonline.com [PDF]
- Debt and seniority: An analysis of the role of hard claims in constraining management – www.nber.org [PDF]
- … clinical decision support in hospitals: getting the benefits: comment on “Unintended effects of a computerized physician order entry nearly hard-stop alert to prevent a … – jamanetwork.com [PDF]
- Financial institutions and the financial crisis in East Asia – www.sciencedirect.com [PDF]
