Cover order allows you to place two opposite orders for the same scrip, simultaneously. The first order is Market Order, and the second order specifies the Stop Loss Trigger Price (SLTP) and a Limit Price.
Since you place the Stop Loss Order simultaneously, while taking a position, the risk automatically reduces.
- Get leverage up to 8 times your intra-day position.
- Enhances profit potential owing to higher exposure.
- Minimises your losses, as you compulsorily use the stop loss feature.
- It is available in the equity and future segment.
- Grab the ultra-short term opportunity available in the markets.
- Starting from 3rd October, 2017 Cover Order square off timing (equity and derivatives) extended from 2:45 PM to 3:00 PM.
How does it work?
1. First order will be the Market order
2. Second order will be a Stop loss order with a Limit price.
Once the market price of the stock breaches this trigger price, the “Stop loss Limit order ‘gets activated for Sell. In the process you book lower losses.
The trigger price has to be between the limit price and the last traded price (LTP) of the stock. It should be lower than 1% of the LTP.
How to place a Cover order?
- You have taken a BUY position on Reliance Industries at the default market rate (i.e Rs.803)
- The cover order (i.e SELL order) will be placed together, with a trigger price of Rs.794 & Limit price of Rs.785
- In a cover order, you need to hold your funds through Hold/Release before placing the order.
Cover Product is an order placement feature where you can take a position at market price and also place a cover order for the position specifying the SLTP and the limit price. This will minimize the loss on the position.
Thereby it gives a clear view of maximum downside involved in a particular position.
The order that is placed for creating the position is called First leg order.
No, First leg order is always a market order.