Short covering refers to the behavior that investors who were originally short in futures and foreign exchange markets were forced to close their positions or go long backhand when their trading direction and positions were reversed. The following is the meaning of short covering compiled by Bian Xiao, hoping to help everyone.

What does short covering mean?

Short covering refers to short positions at high positions. When the price falls to a certain extent, he is forced to close his position or even go long backhand because of the long counter-attack. At this time, the price rebounded temporarily, but it could not rebound to the original height, which was equivalent to the short position profiting out.

Sometimes bulls and bears can switch, usually near the turning point of the market. When this happens, generally speaking, the market will change. It is best for retail investors not to be blindly bullish or bearish. When the market is beneficial to the bulls, take the lead in shorting, and when the market is beneficial to the bears, make up for it by shorting. Only in this way can retail investors cope with it calmly.

Short covering: Originally it was the stock market, but it was sold because of news or data. (enter the market to sell or close the position). Short covering, refers to short positions at a high level, and buy positions when the price falls to a satisfactory level, resulting in a temporary rebound in prices, but unable to rebound to the original height. It is equivalent to a short profit.

Short covering refers to futures. Investors who were originally short in the foreign exchange market (short selling first) were forced to close their positions or go long (buy) by backhand when the trading direction and positions were reversed. Because investors are short, the direction of signing futures contracts is to sell, and they need to buy when they close their positions. In this way, the original bears became bulls, which contributed to the price increase. If the number of futures of a certain variety is relatively small and one party has sufficient funds, it is possible to continuously raise (or lower) the price, forcing the opponent to forcibly close the position, so that the price will continue to develop in a direction beneficial to him.

What is short covering?

When trading margin, we should be aware of the development of the market. Before analyzing the market, we should have a basic understanding of the development of these markets, that is to say, we should define different markets clearly, so as to give a judgment. Now, let's look at the so-called short covering in the market.

Withdrawal, also called withdrawal and short covering, refers to the process that the exchange rate returns to the original support or resistance level after breaking through some key support or resistance levels, and then the margin trading price moves in the breakthrough direction. Long covering short covering refers to the passive exit behavior of short positions in a currency pair, which leads to the exchange rate breaking through a certain key resistance. Bears will naturally take buying long positions as their actual behavior and push the exchange rate to move in a favorable direction.

However, long covering is just the opposite of short covering. short covering is the behavior of long positions leaving the market, pushing the exchange rate to move in the direction favorable to short positions.

When the price of margin trading exceeds the key resistance or support, once there is short covering or long covering, it may trigger a faster short-term market. Whether to seize the opportunity or wait for a while before trading depends on the investor's own ideas, but don't forget to set the stop loss of the account at any time.

The price in the market will not go out of the trend we want according to our own consciousness, so we must have a clear understanding of the trend that often appears in the market, so as not to be suddenly disturbed, at least to ensure that our margin trading has the ability to deal with emergencies at any time.

What's the difference between short covering and long covering?

Short covering refers to a person who wants to wait for the stock price to fall before buying after short selling. Because his stock price is not falling, it is rising all the way, so he should chase up the buying price. However, long covering is just the opposite of short covering. short covering is the behavior of long positions leaving the market, pushing the exchange rate to move in the direction favorable to short positions. When the exchange rate crosses the key resistance or support, once there is short covering or long covering, it may trigger a faster short-term market.

Short covering refers to the person who wanted to wait for the price to come down before buying a stock, but had to chase after it because the stock kept going up.

There is no reason to short the stop loss.

Long-short balance-the power of bulls and bulls in the market is basically balanced;

Long profit-the stock price rises, and the bullish people profit;

Long stop loss-people with bullish stocks sell in time when the stock price has just fallen;

Short covering-bearish people make up positions;

Short stop loss-short sellers close their positions in time after forecasting mistakes;

The numerical value is obtained by the computer system through some column statistics and calculations. Bull market refers to people who think that the stock market or stocks will rise and hold or buy stocks in the operation. The so-called short position refers to the person who thinks that the stock market or stocks will fall and keeps selling stocks in the operation. In the stock market, we sometimes see some people blindly bullish no matter what happens, while others are just the opposite, blindly bearish no matter what happens. These people are dead cows and bears.

And we retail investors must not be dead cows and dead bears. When the stock rises for a long time and the weekly index reaches a high level, there must be a short idea strategically, and run away at the slightest sign; When the stock has fallen for a long time and the weekly index has reached a low level, it is necessary to have a long-term strategic thinking and immediately enter the signal of doing more. Of course, tactically, we can use various methods to buy or sell in batches.

Bulls and bears can sometimes be converted, which is called flipping or reversing, and often happens near the turning point of the market. When this happens, the market will generally change. The majority of retail friends in the stock market, it is best to be more slick, when the market is beneficial to bulls, when the market is beneficial to bears, they will short covering. Only in this way can our retail investors stay invincible for a long time under the attack of many institutions.