Cover On Approach


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.

BREAKING DOWN '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.

  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. Currency Pair

    The quotation and pricing structure of the currencies traded ...
  4. Cover On A Bounce

    The covering of a short position after it has reached and bounced ...
  5. Forex - FX

    The market in which currencies are traded. The forex market is ...
  6. Support (Support Level)

    The price level which, historically, a stock has had difficulty ...
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