Reblog: Buy To Cover Definition: Day Trading Terminology

Buy to cover is an order type made against a stock with the purpose of closing an existing short position. Traders are required to place the buy order with a broker so as to fulfill the requirements of a margin call or to close a position for a profit.

Short selling is the process of borrowing shares from your broker to sell in the open market with hopes of buying them back at a cheaper price. By initiating a buy-to-cover order, the trader is able to cover the short sale allowing the shares to be returned to the rightful lender.

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