Back to Glossary
General TradingC
Cover On Approach
Cover On Approach is a trading strategy where a short seller closes their position as the price approaches a predetermined support level, target price, or technical level. This preemptive exit aims to lock in profits before a potential bounce or reversal occurs. It differs from waiting for an exact price target, as the trader prioritizes securing gains over maximizing the final tick of profit.
Example
“A trader shorts a stock at $50 and sets a target near the $42 support zone. As the price drops to $42.50, the trader covers on approach to lock in profits before a potential bounce off support.”