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. 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. 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 >>
  2. What are the most common market indicators forex traders follow?

    There are literally hundreds of technical indicators for forex traders to choose from, however, there are a few which may ... Read Full Answer >>
  3. What are the best technical indicators to complement the Haurlan Index?

    The Haurlan index is a market breadth indicator used primarily to identify overbought and oversold conditions. Like most ... Read Full Answer >>
  4. What are the best ways to identify Retracements on a stock?

    Technical analysts believe that retracements – temporary movements against a stronger existing price trend – can be distinguished ... Read Full Answer >>
  5. What are the best technical indicators that complement the Price Rate Of Change (ROC)?

    Some of the best technical indicators to complement a trading strategy using the price rate of change, or ROC, are moving ... Read Full Answer >>
  6. What are the best technical indicators that complement the Polarized Fractal Efficiency ...

    Pivot points and major moving averages representing support and resistance levels are good technical indicators to incorporate ... 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

    Buying Opportunities on Upside Wedge Breakouts

    Find buying opportunities in these stocks, which have seen their prices break out of long-term declining wedge patterns.
  5. Chart Advisor

    Inverse Head and Shoulders Patterns Breaking Out

    Watch for higher prices if these stocks complete inverse head and shoulders patterns (a bottoming pattern).
  6. Chart Advisor

    4 Triangle Breakouts Close At Hand

    Triangle breakouts are close at hand in these four stocks. Here's how to trade them.
  7. Chart Advisor

    Consider Buying These Uptrending Stocks

    Recent pullbacks in these uptrending stocks present an opportunity to get long for another possible rally.
  8. 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.
  9. 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.
  10. 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.

You May Also Like

Hot Definitions
  1. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  2. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  3. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  4. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  5. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
  6. Marginal Utility

    The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important ...
Trading Center