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Hard Stop

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]
… 156 REVIEW OF ECONOMIC STUDIES … to refinance high-cost projects at date 3. Knowing that, innovators with high- cost projects will stop at date … This corresponds to the notion of a "hard budget constraint." Although the above discussion regarding the contractual foundation of …

Unintended effects of a computerized physician order entry nearly hard-stop alert to prevent a drug interaction: a randomized controlled trialUnintended effects of a computerized physician order entry nearly hard-stop alert to prevent a drug interaction: a randomized controlled trial
jamanetwork.com [PDF]
… 156 REVIEW OF ECONOMIC STUDIES … to refinance high-cost projects at date 3. Knowing that, innovators with high- cost projects will stop at date … This corresponds to the notion of a "hard budget constraint." Although the above discussion regarding the contractual foundation of …

Sudden stop, financial factors and economic collpase in Latin America: learning from Argentina and ChileSudden stop, financial factors and economic collpase in Latin America: learning from Argentina and Chile
www.nber.org [PDF]
… 156 REVIEW OF ECONOMIC STUDIES … to refinance high-cost projects at date 3. Knowing that, innovators with high- cost projects will stop at date … This corresponds to the notion of a "hard budget constraint." Although the above discussion regarding the contractual foundation of …

Micro-finance evangelism,'destitute women', and the hard selling of a new anti-poverty formulaMicro-finance evangelism,'destitute women', and the hard selling of a new anti-poverty formula
www.tandfonline.com [PDF]
… 156 REVIEW OF ECONOMIC STUDIES … to refinance high-cost projects at date 3. Knowing that, innovators with high- cost projects will stop at date … This corresponds to the notion of a "hard budget constraint." Although the above discussion regarding the contractual foundation of …

Debt and seniority: An analysis of the role of hard claims in constraining managementDebt and seniority: An analysis of the role of hard claims in constraining management
www.nber.org [PDF]
… 156 REVIEW OF ECONOMIC STUDIES … to refinance high-cost projects at date 3. Knowing that, innovators with high- cost projects will stop at date … This corresponds to the notion of a "hard budget constraint." Although the above discussion regarding the contractual foundation of …

… 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 …… 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]
… 156 REVIEW OF ECONOMIC STUDIES … to refinance high-cost projects at date 3. Knowing that, innovators with high- cost projects will stop at date … This corresponds to the notion of a "hard budget constraint." Although the above discussion regarding the contractual foundation of …

Financial institutions and the financial crisis in East AsiaFinancial institutions and the financial crisis in East Asia
www.sciencedirect.com [PDF]
… 156 REVIEW OF ECONOMIC STUDIES … to refinance high-cost projects at date 3. Knowing that, innovators with high- cost projects will stop at date … This corresponds to the notion of a "hard budget constraint." Although the above discussion regarding the contractual foundation of …



Q&A About Hard Stop


How does a hard stop differ from other types of stops?

Hard stops are set at a constant price and are inherently good until cancelled.

What are some examples of when using a hard stop may be useful?

Some examples include when you want to limit losses, protect profits, or lock in gains.

How do you set up a hard stop order?

You can set up your hard stop order by contacting your broker and asking them to place it for you.

Why would you use a hard stop?

To protect the downside of holding an investment by always being active, and only triggered once the price reaches the specified stop level.

When would you choose to use a hard stop?

Many traders will choose to set a hard stop once the price of their investment becomes profitable and leave it active until it reaches the price target.

What is a hard stop?

A hard stop is a price level that, if reached, will trigger an order to sell an underlying security.

How often should you use this strategy?

This strategy should only be used occasionally because it can lead to missed opportunities if not used correctly.

What is the definition of Hard Stop?

A hard stop is a limit on an order to buy or sell a security.

What does Hard Stop mean?

It means that if the price of a stock goes above or below a certain value, then the trade will be executed at that price.

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