+91 22 62 43 43 43   

  • Call Me
  • Open Account
    • Open an Account
    • Fill Online Application
  • Margin Calc
  • IPO
  • Trading Login
    • ProStocks STAR
    • ProStocks Star Web (Beta)
  • Backoffice Lite
ProStocks.comProStocks.comProStocks.com
  • Login
    • ProStocks STAR
    • Backoffice Lite
    • Backoffice Advance with Silver Light
  • Home
  • NRI
    • NRI Trading
    • Non-PIS NRO Trading
    • NRI Brokerage Calculator
    • NRI FAQs
  • Pricing
    • Pricing Plans
    • Brokerage Calculator
    • Margin Calculators
    • Trading Account Charges
    • Demat Account Charges
    • Stamp Duty Charges
  • Why Us
    • Why ProStocks?
    • Compare Brokers
    • Refer & Earn
    • Become a Partner
  • Trading
    • Trading Platforms
    • Fund Transfer
    • Trading Holidays
    • Minor Account
    • HUF Demat Account
    • ProStocks Star API
    • FoxTrader
  • Support
    • Contact Us
    • FAQs
    • Downloads
    • User Guide
    • Advance IVR
    • Blog
    • Press & Media

ProStocks Blog

Return To ProStocks

  1. ProStocks
  2. Support
  3. Blog
Blog
13 September 2021
Hits: 3060

Cover Order Explained

What is Cover order? How to Use Cover Order? Benefits of Cover Order?

How to use Cover Order in Stock Market?

Does ProStocks Provide Cover Order?

Cover Order is Intraday or Carry Forward or Delivery order?

Cover_Order

Introduction

A Cover Order (CO) is two leg orders where first leg of the order creates position and second leg of the order is position off setting/closing stop loss order. As name suggest second leg stop loss order give cover or protection to losses which may arise from first leg order, hence called Cover Order (CO). Cover Order has inbuilt protection. Cover Order is synthetic order is not supported by Exchange API and is created by combining one normal or regular order with one stop loss order, hence synthetic order.

Benefits of Cover Orders

Cover Order allows you to simultaneously place position creating order and corresponding position closing order, in one go.

Cover Orders help you limit any potential losses that could be incurred on a position.

Limited Risk/loss and Maximum Profit: Cover Orders minimize downside risks and provide effective control over risk management. Since there is always a second leg stop loss corresponding to first leg trade/position, Cover Order help users trade in a disciplined manner.

In Nutshell, Cover Order reduces downside risk without imposing any limits on their returns.

How Does a Cover Order Work?

  • A Cover Order (CO) is a two legged order. First leg can be Buy or Sale with compulsory corresponding stop loss order in the opposite direction as second leg of the order.
  • First leg is also known or referred as parent order and second leg as child order.
  • Most Stock Broker if they allow CO, The first entry order will always be a Limit order. However at ProStocks, first leg which will create position can be limit or market or even stop loss order, which is superior to CO where first leg can only be Limit order.
  • Stop loss order will sit in the order book as a Stop-Loss trigger pending order; once last traded price reaches or crosses the trigger price, it gets triggered (Converted) as a normal Limit order (from SLL) or normal limit order (from SLL). At ProStocks, second leg is always SLL and first leg if placed as stop loss position creator order, than SLL.
  • The trigger price range will be defined daily and the client must place the stop loss order within the specified range. For example, suppose Infosys is trading at Rs. 1700/- and daily price range (also known as circuit limit) for the day is Rs 1530/- to Rs 1870/-. In this case the client can specify the Stop Loss order between the price ranges of Rs.1530/- to 1870/- as the trigger price. Clients are expected to keep sufficient gap from lower and upper limit to ensure that order gets traded.
  • Once first leg of the Cover Order (position creator order / parent order) gets traded, the client will not have the ability to cancel the second leg (child) of Cover Order. Second leg (position closing / child) order can be modified but cannot be cancelled.
  • Cover Order is presently available as intraday product. Intraday position will be auto squared-off by our system if you do not square them off within the stipulated timings on best efforts basis.
  • If second leg of the cover order is rejected / cancelled for any reason, please regenerate second leg or you will have to reach our dealing desk over the phone to square off the position or regenerate the second leg. Please get in touch with us on our helpline at +91-22-62434343 and press 1 for dealing from 9 AM to 5 PM on working days.
  • Cover Order are available for Equity, Equity Future & Option and Currency Future & option.
  • ProStocks soon intent to introduce Cover Order as Delivery (For Equity segment) and Carry Forward (for Derivatives segment) product.

How to place Cover Order

Buy Cover Order where First Leg is Normal Order

E.g. Infosys current price is Rs 1671.9 and you intend to buy 100 shares @ Rs 1665/- per share and to protect yourself from downside, you want to keep a stop loss of Rs 5.

To place Buy Cover Order go to order entry window and select Cover. Then you need to give the Quantity as 100, Price as 1665 and Stop Price as 5.

In Stop Price you need to put the difference price between limit price per share and trigger price per share.

So as and when Infosys Price falls to Rs 1665 your Buy Order will get traded and a Sell Stop Loss Limit Order (SL-LMT) will get placed where Trigger Price is 1660 and limit price will be 1% below trigger price i.e. 1643.40. Remember your actual trade may be lower than Rs 1660 (as this is SL-LMT) as trigger will happen when last traded price will come to Rs 1660 and trade will happen at best possible market rate however if price falls below 1643.40 also as soon as SLL get triggered, your order will be pending and you would need to manually sq off.

Please note that starting 27th Sep 2021, NSE has placed restrictions on Stop Loss market Orders.

Buy_Cover_Order_Where_First_Leg_is_Normal_Order


Buy Cover Order with first leg is also Stop Loss order

E.g. Infosys current price is Rs 1672.75 and you intend to buy 100 shares if price goes to Rs 1680/- per share and to protect yourself from downside, you want to keep a stop loss of Rs 5.

To place Buy Cover Order with First Leg is Stop Loss, go to order entry window and select Cover and then select SL. You need to give the Quantity as 100, Price as 1680, Stop Price as 5 and First Leg Trigger Price as 1679.25.

So as and when Infosys Price goes to Rs 1679.25, your Buy SL Order will get triggered with limit price of Rs 1680. Assume 100 shares got bought @ Rs 1679.50. Now Sale Stop Loss Limit Order (SL-LMT) will get placed where Trigger Price is 1674.5 i.e. actual buy price of Rs 1679.50 minus stop loss of Rs 5 and limit price will be 1% below trigger price i.e. 1657.75. Remember your actual trade may be lower than Rs 1674.5 (as this is SL-LMT) as trigger will happen when last traded price will come to Rs 1674.5 and trade will happen at best possible market rate however if price falls below 1657.75 as soon as SLL get triggered, your order will be pending and you would need to manually sq off.

Buy_Cover_Order_with_First_Leg_is_also_Stop_Loss


Sell Cover Order where first leg is normal order

E.g. Infosys Current Price is Rs 1673 and you intend to sell 100 shares @ Rs 1680/- per share and to protect yourself from downside, you want to keep a stop loss of Rs 5.

To place Sell Cover Order go to order entry window and select Cover. Then you need to give the Quantity as 100, Price as 1680 and Stop Price as 5.

So as on when Infosys Price rises to Rs 1680 your Sell Order will get traded and a Buy Stop Loss Limit Order (SL-LMT) will get placed where Trigger Price is 1680 and limit price will be 1% above trigger price i.e. 1701.85. Remember your actual trade may be greater than Rs 1680 (as this is SL-LMT) as trigger will happen when last traded price will come to Rs 1680 and trade will happen at best possible market rate however if price goes above 1701.85 as soon as SLL get triggered, your order will be pending and you would need to manually sq off.

Sell_Cover_Order_Where_First_Leg_is_Normal_Order


Sell Cover Order with first leg is also Stop Loss order

E.g. Infosys Current Price is Rs 1672 and you intend to sell 100 shares if price goes to Rs 1665/- per share and to protect yourself from downside, you want to keep a stop loss of Rs 5.

To place Sell Cover Order with First Leg is Stop Loss, go to order entry window and select Cover and then select SL. You need to give the Quantity as 100, Price as 1665, Stop Price as 5 and first leg trigger price as Rs 1665.75.

So as and when Infosys Price goes to Rs 1665.75, your Sell SL Order will get triggered with limit price of Rs 1665. Assume 100 shares got sold @ 1665.50. Now Buy Stop Loss Limit Order (SL-LMT) will get placed where Trigger Price is 1670.5 i.e. actual sell price of Rs 1665.50 plus stop loss of Rs 5 and limit price will be 1% below trigger price i.e.1687.21. Remember your actual trade may be greater than Rs 1670.5 (as this is SL-LMT) as trigger will happen when last traded price will come to Rs 1670.5 and trade will happen at best possible market rate however if price goes above 1687.21 as soon as SLL get triggered, your order will be pending and you would need to manually sq off.

Sell_Cover_Order_with_First_Leg_is_also_Stop_Loss


Video Tutorial
https://www.youtube.com/watch?v=JxVR4sQIxpY



People in this conversation

Comments (1)

Sort by Oldest First
Sort by Latest First
Subscribe:
Email
  • Guest - Kalu

    about 3 months ago

    Good<a href="https://www.stockpatrika.com/">-</a>Information

    http://maps.google.com/maps?z=15&q=,
    Share
    Short URL:
    Permalink

Stickies

Lovies

Login to post a comment

Register · Forgot password

Post comment as a guest

    0

    Latest Articles

    Intimation of NRI status to Income Tax Officer for Pan Database. 30 March 2022
    How to tender ESCORTS shares in open offer without Physical DIS Slip 17 March 2022
    GTT Terms and Conditions 21 January 2022
    Cover Order Explained 13 September 2021
    Peak Margin Reporting and its Impact effective 1st September, 2021 01 September 2021
    Monthly Brokerage Plan for Resident Individual by ProStocks. 11 August 2021
    Introducing ProStocks Star Platform 08 May 2021
    Peak Margin Reporting and its Impact 30 November 2020
    Can I open NRO Non-PIS Trading and Demat Account? 29 April 2020
    Zero Brokerage for Equity Delivery 29 February 2020
    How to avoid misuse of Power of Attorney (PoA) by Stock Broker/Brokerages or Relatives? 23 January 2020
    Stamp Duty Demystified 26 December 2019
    What are the order type available for derivatives market? How trading system works? How order matching takes place? Which order has priority over others? 04 May 2018
    What is easi, easiest facility to monitor and transact through Demat Account and How to register? 29 August 2017
    Difference Between Demat Account and Trading Account 21 June 2017
    ProStocks Advanced Interactive Voice Response (IVR) System 22 May 2017
    ASBA Application for IPO Investment 06 January 2017
    NRI Trading with ProStocks, Step by Step Guide. 01 November 2016
    Overcharging ‘Exchange Transaction Fee’ by Many Brokers in India 20 October 2016
    Time to change your Broker? 25 June 2016

    Request Call Back



    • About Us
    • Fund Transfer
    • Fund Transfer FAQs
    • Downloads
    • Sitemap
    • Testimonials
    • Trading Holidays

    Need Help?

    Mumbai Office:
    B-50, Pravasi Estate, Goregaon (East), Mumbai - 400063

    Call us on +91 22 62 43 43 43

    Email: [email protected]

    Sunlight Broking LLP
    Registered Office:
    146, Center point, Near Somnath, Dabhel, Nani Daman, Daman (UT), India 396210

    Registration Numbers:
    SEBI Regn. No.: INZ000048660 INDP2802016 | BSE Member code: 6635 | NSE Member code: 90084 | CDSL DP ID: 12083200 | AMFI Registration No (ARN): 119535


    Attention Investors

    Prevent unauthorized transactions in your demat account. Update your mobile number with your depository participant. Receive alerts on your registered mobile number for debit and other important transactions in your demat account directly from CDSL on the same day.
    Prevent unauthorized transactions in your trading account. Update your mobile numbers/email address with your stock brokers. Receive information of your transactions directly from the Exchange on your mobile/email at the end of the day. This is issued in the interest of investors.
    Client Registration Documents in Vernacular Languages can be download from here.
    Investment in stock market are subject to market risk.
    No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account.
    KRA-KYC is one time exercise while dealing in securities markets - once KRA-KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund, etc...), you need not undergo the same process again when you approach another intermediary. As a business we don't give stock tips, and have not authorized anyone to trade on behalf of others. If you find anyone claiming to be part of Sunlight Broking LLP and offering such services, please send us an email to [email protected]

    Investor Grievance: NSE | BSE | SEBI | CDSL | [email protected]

    Privacy Policy | Disclaimer | Management Policy and Procedure | Investor Charter

    • NSE
    • |
    • BSE
    • |
    • RBI
    • |
    • AMFI
    • |
    • FM
    • |
    • CDSL
    • |
    • SEBI
    © , ProStocks

    ProStocks, A Sunlight Broking LLP Venture

    Please wait while we are processing your request.

    Loading...
    • Login
      • ProStocks STAR
      • ProStocks Star Web (Beta)
      • Backoffice Lite
      • Backoffice Advance with Silver Light
    • Home
    • NRI
      • NRI Trading
      • Non-PIS NRO Trading
      • NRI Brokerage Calculator
      • NRI FAQs
    • Pricing
      • Pricing Plans
      • Brokerage Calculator
      • Margin Calculators
      • Trading Account Charges
      • Demat Account Charges
      • Stamp Duty Charges
    • Why Us
      • Why ProStocks?
      • Compare Brokers
      • Refer & Earn
      • Become a Partner
    • Trading
      • Trading Platforms
      • Fund Transfer
      • Trading Holidays
      • Minor Account
      • HUF Demat Account
      • ProStocks Star API
      • FoxTrader
    • Support
      • Contact Us
      • FAQs
      • Downloads
      • User Guide
      • Advance IVR
      • Blog
      • Press & Media

    Request Callback for New Account

    Call Me Now

    For NRI callback, please submit request from NRI Trading