Cover Order :thumb:
Cover order is an instrument to attract more and more clients for trade. This order gives the client an exposure to trade with the ‘LIVE market existing price’ and a safety tool of ‘stop loss’ together. This is a very bright measure offered to the client that is mostly used by most of them taking an intraday position advantage. The risk is limited in this kind of order and the return can shower wonders.
Advantages of Cover Order
Being the most demanded intraday tool, this order provides various leads to its master. Some of its benefits are-
1. It can be applied instantly as the client need not resist for market rise or fall. The prevailing market rates will come into place for placing an order.
2. The client has the option of play safe with adding a stop loss market order with the order placed. This tool prevents the clients from suffering extreme losses.
3. The client can minimize his risk work independently without a flaw. The order placed help clients to minimize downside risk.
4. This order provides the risk management team to favor client as the exposure limit is limited to a small margin, where in case of loss, an automatic square off will be done.
5. The RMS sets a limit of certain percentage against the market rate and as soon as there is an occurrence of loss, it will limit the loss to that extent which was set earlier by the RMS.
6. In case the order is not squared by the client, it will be done by the RMS at 1515 hrs.
7. The trigger price range will fluctuate on a daily bases as per the market fluctuations and the client can place the stop loss market order within the specified range.
8. The clients can take the best comfort of margin benefits using cover order facility to leverage their positions at a stop loss adjacent to the prevailing market order.
9. Cover order never introduces any unnecessary limit on clients returns.
Let us take an example-
Take it Cipla. Suppose Cipla is trading at Rs. 400. The broker can set a specified range of 12.5%.
Here, the client can have the maximum loss of Rs. 50 and nothing beyond that. It is because the trigger is set at Rs 350 so as soon as in any adverse circumstances, the market reaches 349, the order will be squared off at 350 with the maximum loss of Rs. 50 and nothing beyond that.
Yes the profits can be unlimited but the main aim of the cover order is to protect the client from utmost loss.
Cover order is an instrument to attract more and more clients for trade. This order gives the client an exposure to trade with the ‘LIVE market existing price’ and a safety tool of ‘stop loss’ together. This is a very bright measure offered to the client that is mostly used by most of them taking an intraday position advantage. The risk is limited in this kind of order and the return can shower wonders.
Advantages of Cover Order
Being the most demanded intraday tool, this order provides various leads to its master. Some of its benefits are-
1. It can be applied instantly as the client need not resist for market rise or fall. The prevailing market rates will come into place for placing an order.
2. The client has the option of play safe with adding a stop loss market order with the order placed. This tool prevents the clients from suffering extreme losses.
3. The client can minimize his risk work independently without a flaw. The order placed help clients to minimize downside risk.
4. This order provides the risk management team to favor client as the exposure limit is limited to a small margin, where in case of loss, an automatic square off will be done.
5. The RMS sets a limit of certain percentage against the market rate and as soon as there is an occurrence of loss, it will limit the loss to that extent which was set earlier by the RMS.
6. In case the order is not squared by the client, it will be done by the RMS at 1515 hrs.
7. The trigger price range will fluctuate on a daily bases as per the market fluctuations and the client can place the stop loss market order within the specified range.
8. The clients can take the best comfort of margin benefits using cover order facility to leverage their positions at a stop loss adjacent to the prevailing market order.
9. Cover order never introduces any unnecessary limit on clients returns.
Let us take an example-Take it Cipla. Suppose Cipla is trading at Rs. 400. The broker can set a specified range of 12.5%.
Here, the client can have the maximum loss of Rs. 50 and nothing beyond that. It is because the trigger is set at Rs 350 so as soon as in any adverse circumstances, the market reaches 349, the order will be squared off at 350 with the maximum loss of Rs. 50 and nothing beyond that.
Yes the profits can be unlimited but the main aim of the cover order is to protect the client from utmost loss.
