Hard Stop

AAA

DEFINITION of '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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches ...
  2. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  3. Soft Stop Order

    A mental price or percentage set by traders where they will place ...
  4. Stop Order

    An order to buy or sell a security when its price surpasses a ...
  5. Stopped Out

    The execution of a stop-loss order. Stopped out refers to when ...
  6. Underlying

    1. In derivatives, the security that must be delivered when a ...
RELATED FAQS
  1. How does a stop-loss order work, and what price is used to trigger the order?

    A stop-loss order, or stop order, is a type of advanced trade order that can be placed with most brokerage houses. The order ... Read Full Answer >>
  2. How can I use a buy limit order to buy a stock?

    An investor uses a buy limit order to buy a stock at a specific price or better price. Unlike a market order that takes the ... Read Full Answer >>
  3. What is the difference between a buy limit and a stop order?

    A buy limit order is used when an investor wants to open a long position in a stock at a certain price, while a stop order ... Read Full Answer >>
  4. What are some ways to reduce downside risk when holding a long position?

    A trader seeking to minimize his downside risk in an existing long position can do a number of things to protect a portion ... Read Full Answer >>
  5. How do I determine where to set my stop loss?

    Determining stop-loss order placement is all about targeting an allowable risk threshold. This price should be strategically ... Read Full Answer >>
  6. What types of investors are best-suited for stop loss orders?

    From conservative investors to highly speculative day traders, no one likes to see a loss in a portfolio. There are several ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Increase Your Profits With Soft Or Mental Stops

    A soft stop provides a trader with added flexibility, allowing him to react to ongoing changes in the market.
  2. Options & Futures

    A Logical Method Of Stop Placement

    If holding on to losing trades is human nature, this tool will help protect you from yourself.
  3. Active Trading Fundamentals

    The Stop-Loss Order - Make Sure You Use It

    It's a simple but powerful tool to help you implement your stock-investment strategy. Find out how.
  4. Trading Strategies

    Making The Trade: Understand Order Types

    Buying and selling stock can be a lot like buying or selling a car. Traders should use and understand tools such as market orders, limit orders, day orders, and good-'til-canceled orders to ensure ...
  5. Trading Strategies

    Patience Is A Trader's Virtue

    Waiting may be the biggest key to reeling in that trophy investment.
  6. Investing Basics

    Narrow Your Range With Stop-Limit Orders

    With stop-limit orders, buyers protect themselves from prices too high for their tastes.
  7. Trading Strategies

    How to Use Trailing Stops

    A trailing stop is an order to buy or sell a security if it moves in an unfavorable direction.
  8. Active Trading

    Pinpoint Winning Trade Entries With Filters And Triggers

    These tools will help you enter at high-probability points and ensure you trade within your set strategy.
  9. Active Trading Fundamentals

    Trailing-Stop Techniques

    The important decision to exit a position must be based on more than emotion if you want to be a disciplined trader.
  10. Investing

    Stop Limit Orders

    A stop limit is an order to sell or buy a stock once it reaches a certain level, but only if the shareholder can obtain a specified price.

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center