A cover order is a market order or limit order that is placed along with a Stop Loss order which helps in mitigating risk. Since a Stop Loss order is placed, the maximum loss you will bear is known in advance if the trade moves against you. Cover orders’ purpose is to reduce the risk for the broker and the trader and enable the trader to get higher leverage.
A Cover Order is either a market order or a limit order placed along with a compulsory Stop Loss order in a specified range. Also, please note that while placing a buy CO order, your Limit price has to be higher than your stop-loss trigger price, and while placing a sell CO order, your limit price has to be lower than your stop loss trigger price.
On scrips where Cover Order is available on Dhan, the same will be available in the selection for Intraday Trading.
Note - The Stop Loss Range has to be 0.25% or Rs. 050 Paise (Whichever is higher) for Equity Stocks and Future, For Index Future 0.2%.
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