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short covering definition - finance
A situation in which traders have sold securities that they didn’t own, expecting prices to continue falling. When the trend reverses, they must “cover their shorts” by purchasing back what they sold, often at a loss. Because many traders are buying, prices rise, resulting in a short-covering rally.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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