Cover On A Bounce

The covering of a short position after it has reached and bounced off a level of support. This strategy waits for the price to move to a support level, instead of selling before, to see if the level will hold - because the trader will benefit if it doesn't hold. Once the security bounces, it is clear the security will have trouble moving down further, so the trade covers the short position.

Levels of support act as a backstop to a further move downward in price, but can sometimes fail to hold. If a security falls below a support level, it will often lead to an even stronger downward move as the level is taken out. The trader waiting for a bounce is betting that the support level will not hold and they will benefit if this materializes.

Investment dictionary. . 2012.

Look at other dictionaries:

  • bounce around — ˌbounce a ˈround [transitive] [present tense I/you/we/they bounce around he/she/it bounces around present participle bouncing around past tense bounced ar …   Useful english dictionary

  • Bounce (song) — Infobox Single Name = Bounce Artist = Tarkan from Album = Come Closer Released = 25 October 2005 (Turkey) Format = CD single [ Recorded = 2005] Genre = R B Length = 3:43 ( Bounce Radio Edit only) Label = HITT Music Writer = Tarkan, Devrim… …   Wikipedia

  • Bounce music — New Orleans Bounce music Stylistic origins Southern rap Cultural origins Early 1990s, New Orleans, United States Typical instruments Turntables Sampler Mixer Vocals …   Wikipedia

  • Charity Bounce — The Goodies episode Episode no. Series 2 Episode 19 (of 74) Produced by Starring …   Wikipedia

  • The Big Bounce — Infobox Book name = The Big Bounce title orig = translator = image caption = author = Elmore Leonard illustrator = cover artist = country = USA language = English series = subject = genre = publisher = ? pub date = 1969 english pub date = media… …   Wikipedia

  • dead cat bounce — n. Stock Market a temporary recovery in share prices after a substantial fall, caused by speculators buying in order to cover their positions * * * ˌdead cat ˈbounce [dead cat bounce] noun a temporary and small upward movement in share prices… …   Useful english dictionary

  • Overdraft — I warn you, Sir! The discourtesy of this bank is beyond all limits. One word more and I I withdraw my overdraft! Cartoon from Punch Magazine Vol. 152, June 27, 1917 An overdraft occurs when money is withdrawn from a bank account and the… …   Wikipedia

  • Raymond Scott — Infobox Musical artist Name = Raymond Scott Img capt = Img size = 175px Landscape = Background = Birth name = Harry Warnow Alias = Born = 10 September 1908 Died = 8 February 1994 (aged 85) Origin = Instrument = piano, celeste, electronic devices… …   Wikipedia

  • Marvel Mangaverse — Cover art for Marvel Mangaverse: New Dawn #1, by Ben Dunn. The Marvel Mangaverse is a series of comic books published by Marvel Comics from 2000 to 2002, with a sequel New Mangaverse released in late 2005 and early 2006. The series depicts an… …   Wikipedia

  • Comparison of cricket and baseball — Cricket and baseball are the best known members of a family of related bat and ball games. While many of their rules, terminology, and strategies are similar, there are many differences some subtle, some major between the two games. Other present …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.