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, traditionally, 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 Says:
Critical support levels often prove to provide limits for how far a secuirty can fall. By selling out 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:
Cover On A Bounce
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