Hard Stop

A hard stop is more of a concept than an actual order type. A hard stop presumes a price level that, if reached, will trigger an order to sell an underlying security. Hard stops are usually implemented as a stop order on an open position in a market. The order is likely set to be good until canceled or filled whichever comes first. When the designated price level is traded, the order converts into a market order and the next available market price is taken as the trade. The concept behind the hard stop is merely that the rule is uncompromising and must be followed.