# Fixed Stops

Also known as: percent, dollar, time, session-close, disaster/catastrophic, guaranteed broker stops.
A Risk, Sizing & Exits concept (Stop taxonomy) in the LuxAlgo Library, with 1 indicator implementation.

## What are Fixed Stops?

Fixed stops are exits defined by a predetermined rule rather than by chart context: a set percentage or dollar distance from entry, a time stop that closes the trade after a set number of bars, or a session-close rule that flattens everything by a chosen time. The family also includes the disaster stop, a deliberately wide catastrophic order sitting behind subtler exit logic, and broker-side guaranteed stops, which for a premium fill at the exact level, while an ordinary stop converts to a market order when triggered and can slip or gap.

Their strength is that risk is known before entry, which keeps [percent-risk sizing](https://www.luxalgo.com/library/concept/fixed-fractional/) trivial and audits simple. Their weakness is context-blindness: the same 2% sits inside the noise of a volatile symbol and far outside the noise of a quiet one, which is the gap [volatility stops](https://www.luxalgo.com/library/concept/volatility-stop/) and [structure stops](https://www.luxalgo.com/library/concept/structure-stop/) exist to close.

Each member of the family earns its place differently. The time stop encodes thesis expiry: a setup predicts something within a horizon, and a trade that has done nothing by then is dead capital still carrying open risk. The session-close stop is gap hygiene for intraday methods, refusing to hold exposure through halts the strategy never modeled. The disaster stop is sized in multiples of the normal exit, wide enough that it should never fill, existing purely so that a resting order survives a platform failure or a runaway move. Execution mechanics matter across all of them: the [order type](https://www.luxalgo.com/library/concept/order-types/) decides whether a triggered stop chases the market for a certain fill or holds a limit and risks no fill at all.

Fixed brackets also dominate the packaged-strategy world: signal scripts overwhelmingly ship take-profit and stop-loss as fixed ratios of entry, because the bracket is unambiguous to automate and produces comparable statistics per signal, the [profit-target taxonomy's](https://www.luxalgo.com/library/concept/profit-target-taxonomy/) simplest members. The honest deployment logic runs on stability: fixed distances work where the instrument's volatility regime is stable or where external rules, evaluation drawdown caps, mandate hard numbers, and they degrade exactly when regimes shift, the moment adaptive stops were built for.

## How to identify and deploy fixed stops

The family is defined by predetermination: every parameter is known before entry.

1. Choose the rule type: percent or dollar distance, elapsed-time deadline, session-close flattening, or a catastrophic backstop behind other logic.
2. Set the parameter from the plan rather than the chart: the fixed distance, the bar count, or the flatten time.
3. Wire the mechanics: the [order construct](https://www.luxalgo.com/library/concept/order-constructs/), typically an OCO bracket pairing stop and target, and the order type that decides fill-certainty versus price-certainty.
4. Check the sizing consistency: the fixed distance feeds percent-risk sizing directly, which is the pairing that makes the whole scheme auditable.
5. Layer the disaster stop: a resting order at a multiple of the normal distance, present at the broker regardless of what the primary logic is doing.

## How it's calculated

An exit fixed at entry, as a price level, a cash loss, or a time limit, that closes the trade without further adjustment.

```
1. Set the exit when the position is opened and leave it unchanged for the life of the trade; only the initial placement differs by type.
2. Percent stop: Stop = E × (1 - s) for a long, Stop = E × (1 + s) for a short.
3. Cash (dollar) stop: d = R / (Q × PV), then Stop = E - d for a long and Stop = E + d for a short.
4. Time stop: exit at market after N bars or days in the trade if no other exit has fired first.
5. Session close stop: exit on the final bar or closing auction of the chosen session, common for strategies that hold no overnight risk.
6. Disaster stop: place a resting stop far beyond normal noise, for example several times the normal stop distance, as a backstop in case the primary exit fails.
7. The trade closes when price trades at or through the stop level, which converts the stop order to a market order, or at the scheduled time for the time based types.

  E: entry price
  s: stop distance as a decimal fraction of entry (e.g. 0.02 for a 2% stop; no universal default)
  R: fixed cash amount risked on the trade
  Q: position size in shares, units, or contracts
  PV: point value, the cash value of a 1.0 price move per unit (1 for stocks)
  d: stop distance in price units
  N: maximum holding time in bars or days (strategy specific)
  Stop: stop price
```

Fixed means the level or deadline never moves after entry, in contrast to a trailing stop.

An ordinary stop becomes a market order when touched, so gaps and fast markets can fill beyond the level; a paid broker stop product (GSLO) fills at the stop price even through a gap, in exchange for a premium and placement restrictions.

Sizes have no universal defaults; percent, cash, and time values are strategy and timeframe specific.

## How traders use it

- As the sizing anchor in mechanical systems: a fixed percent or dollar stop gives every trade a known worst case before slippage, so size and R accounting stay simple.
- As clock discipline: time stops close trades whose thesis expired unfulfilled, and session-close stops keep intraday strategies from carrying overnight gap risk.
- As the backstop layer: a wide disaster stop ensures a resting order exists if the primary exit logic fails or a move runs away; gaps can still fill beyond it.
- As automated brackets: packaged signal strategies ship fixed TP/SL pairs because the bracket automates cleanly and every signal produces comparable risk-reward statistics.
- Under external mandates: evaluation accounts and prop rules cap losses in fixed dollars, making fixed stops the native dialect of those constraints regardless of what a volatility model would prefer.

## Fixed stops vs adaptive exit families

- **Volatility Stop** (https://www.luxalgo.com/library/concept/volatility-stop/): The volatility stop scales its distance to current conditions, sitting outside the noise band wherever the noise band currently is. The fixed stop's constant distance is inside the noise on wild symbols and wastefully far on quiet ones, which is the exact failure volatility scaling repairs.
- **Structure Stop** (https://www.luxalgo.com/library/concept/structure-stop/): The structure stop derives its level from the chart, beyond the swing that invalidates the trade thesis, so its distance varies trade by trade. The fixed stop ignores the chart entirely. One prices invalidation, the other prices convenience, and the honest choice depends on whether the setup has a real invalidation point.
- **Trailing Methods** (https://www.luxalgo.com/library/concept/trailing-method-taxonomy/): Trailing stops move with the trade, converting open profit into protected profit; fixed stops stay where they were placed. The families answer different questions, initial risk versus profit management, and most complete plans use one of each.

## FAQ

### Are guaranteed stop-loss orders worth the premium?

They convert slippage risk into a known fee: the broker commits to your exact exit level even through a gap, charging a premium or wider spread. The value scales with gap exposure, which is highest around closes, scheduled news, and weekends. In continuously liquid conditions ordinary stops usually fill near the level anyway; across binary events they cannot promise that, and the guarantee is the product.

### What is a time stop in trading?

A time stop exits after a fixed interval, measured in bars, hours, or sessions, regardless of price. The logic is that a setup carries an implicit deadline: a trade that has gone nowhere by then is dead capital still carrying open risk. Time stops usually run alongside price stops, and whichever triggers first closes the trade.

### How wide should a disaster stop be?

Wide enough that it should never fill: common practice sets it at several multiples of the normal stop distance, far beyond any level the strategy's own logic would use. Its job is purely institutional, a resting order that survives platform outages, connectivity failures and runaway moves when the primary exit logic cannot act. It caps catastrophe rather than managing trades, and gaps can still fill beyond it.

### Should stops be stop-market or stop-limit orders?

The trade-off is fill-certainty against price-certainty. A stop-market guarantees exit but takes whatever price the book offers, which in thin conditions can be far through the level; a stop-limit refuses to fill beyond its limit, protecting the price while risking no exit at all in a fast move. For risk-control stops, most practitioners accept slippage over the possibility of riding through the level unexecuted, reserving stop-limits for liquid instruments and modest distances.

### Do time stops actually improve systems?

The logic is sound and the evidence is strategy-specific. Setups predict something within a horizon, and exiting stale trades frees capital and removes open risk that no longer has a thesis behind it; tested on mean-reversion systems especially, time exits often trim the long tail of lingering losers. The honest procedure is empirical: measure how your strategy's trades age, and set the deadline where expectancy demonstrably decays.

### Why not use the same fixed percentage across every symbol?

Because volatility differs by an order of magnitude across instruments, and a fixed percentage is silently a different stop on each. Two percent sits inside a volatile crypto pair's hourly noise and outside a quiet blue chip's weekly range, so the same rule produces random stop-outs on one and dead capital on the other. That is the core critique of the family, and the standard fix is scaling distances by each instrument's own volatility.

## Implementations in the Library

- Fixed Stops (LuxAlgo): https://www.luxalgo.com/library/indicator/fixed-stops/

## Related concepts

- Structure Stop: https://www.luxalgo.com/library/concept/structure-stop/
- Volatility Stop: https://www.luxalgo.com/library/concept/volatility-stop/
- Breakeven Move Rules: https://www.luxalgo.com/library/concept/breakeven-move-rules/
- Mental vs Hard Stop: https://www.luxalgo.com/library/concept/mental-vs-hard-stop/
- Stop Placement vs Liquidity Pools: https://www.luxalgo.com/library/concept/stop-placement-vs-liquidity-pools/
- Elder SafeZone Stop: https://www.luxalgo.com/library/concept/elder-safezone-stop/
- Pattern-invalidation Stop: https://www.luxalgo.com/library/concept/pattern-invalidation-stop/
- No-stop Hedging: https://www.luxalgo.com/library/concept/no-stop-hedging/

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Source: https://www.luxalgo.com/library/concept/fixed-stops/ (LuxAlgo Library, the encyclopedia of trading & technical analysis). Free to use with attribution: https://www.luxalgo.com/library/license/