What is a heavy stop?
Hard stop is an investment strategy that includes the determination of the price level that causes the sale of safety if the level is reached. Sometimes referred to as a good approach canceled access , investors have ever introduced this type of limit order to a place to ensure that security is sold before the price may drop below what the investor has determined is an acceptable level. Depending on the nature of the safety, the hard stop may be the basis for issuing the order of stop-limit, which the intermediary can perform automatically without having to consult the investor in advance.
One of the advantages of establishing a hard stop is that it prevents the investor from losing money for investment. For example, if the round part of the share is purchased for $ 100 (USD) per share, then increases the value to $ 125 per share, the investor may decide to set a hard stop at the share. This will help ensure some of the mammary return is realized even whenThe trend with the shares turns at a certain point. This strategy means that at the time the limit order is made, the investor not only gets the original investment, but also receives a profit of $ 10 per share.
The order type that can be created using this hard stop varies somewhat. With some investments, brokers and retailers, they will not accept the stop-limit order, but accept the limit order or stop order. While all these orders are similar, there are small differences. The limit order sets a price range that must be met before the investor sells, while the command to stop requires that the price be set for a specific amount. For example, the limit order would allow brokers to sell shares as soon as the price drops to a specified range without waiting for a minimum affordable price. With a stop order would only be secured with the security ofRiet rates identified by the investor as a hard stop.
It is important to realize that the order that includes hard stops remains in force until either or the investor decides to cancel the order. If the value of the security never falls to the level of a hard stop, then the order remains active but never included a broker that holds the order. This approach is very easy for investors to set limits and pay attention to other projects than to continuously monitor the movement of safety.