posted on 06-06-2019

Hardening

Updated October 1, 2019

What is Hardening?

Hardening refers to stabilization or steady increases in a price level.

How Does Hardening Work?

Financial instruments and derivatives frequently experience volatile market-price fluctuations. Hardening is the process of market prices gradually returns to a normal levels following a period of instability. Likewise, an item that experiences steady long-term gains rather than abrupt short-term price escalations is described as hardening

Why Does Hardening Matter?

Hardened securities and derivatives tend to experience smaller day-to-day fluctuations and are often attractive to investors, because they become easier to predict and have a decreased level of risk.