Cover On Approach

AAA

DEFINITION of 'Cover On Approach'

The closing out of a profitable short position as the security moves toward a key level of support. As a security moves closer to a level of support the chances of it falling any further weaken because buying has come into the security at the support level, which keeps the price from a continued downward move and limits the continued success of the short trade.

INVESTOPEDIA EXPLAINS 'Cover On Approach'

Critical support levels often provide limits for how far a security can fall. By covering before the security gets to the support level, they are being conservative with their gains as support levels limit further moves downward and can often see large moves back up as the security bounces.

RELATED TERMS
  1. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
  2. Pip

    The smallest price change that a given exchange rate can make. ...
  3. Support (Support Level)

    The price level which, historically, a stock has had difficulty ...
  4. Forex - FX

    The market in which currencies are traded. The forex market is ...
  5. Cover On A Bounce

    The covering of a short position after it has reached and bounced ...
  6. Currency Pair

    The quotation and pricing structure of the currencies traded ...
RELATED FAQS
  1. What is a pip and what does it represent?

    A pip is a very small measure of change in a currency pair in the forex market. It can be measured in terms of the quote ... Read Full Answer >>
Related Articles
  1. Forex Education

    Top 7 Questions About Currency Trading Answered

    Whether you're puzzled by pips or curious about carry trades, your queries are answered here.
  2. Forex Education

    Make The Currency Cross Your Boss

    Tap into a world of possibilities by going beyond the simple pro- or anti-dollar trade.
  3. Forex Education

    Forex Tutorial: The Forex Market

    In this online tutorial, beginners and experts alike can learn the ins and outs of the retail forex market.
  4. Chart Advisor

    These ETFs are Breaking Out of Chart Patterns Now

    Three buys and one sell; here are four ETFs breaking out of chart patterns right now.
  5. Chart Advisor

    Profit From the Range in These Stocks and ETFs

    These four stocks just bounced off range support, offering profit potential to the upside.
  6. Options & Futures

    The Basics Of Trading S&P 500 Price Progression

    The S&P 500 index futures contract works exceptionally well as a road map for short-term market timing and direction.
  7. Chart Advisor

    4 Big Stock Gainers: Hold or Sell?

    These four stocks saw big moves higher on March 17. Is it time to take profits or hold out for more. Here's what the charts say.
  8. Chart Advisor

    Stocks Getting Hit Hard at Resistance

    Time to take profits in these stocks, which are selling off after hitting resistance.
  9. Chart Advisor

    These Transportation Stocks Are at a Crossroads

    These shipping and railroad stocks are testing resistance. A break above signals an emerging uptrend; a break lower, a continuation of the downtrend.
  10. Trading Strategies

    Day Trading: Top Scenarios To Take Profits

    Three ways to take profits while day trading, based on price movement and what the asset is doing that day.

You May Also Like

Hot Definitions
  1. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  2. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  3. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  4. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  5. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  6. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
Trading Center