Advantages: 1. Higher Leverage. 2. Stop Loss is attached with the Entry order, so losses are limited.
You can exit CO with profit. But you cannot place a LIMIT order. To exit a CO with profit, one has to keep track of the LIVE price movement and EXIT at market price from the order book.
You can watch this video for more.
Cover Order has following advantages:
1. You have to place order with a stop loss. The stop loss triggers at a particular nearly in a range of 2-3% where we could define the stop loss trigger price.
2. There is a pending order (stop loss) attached to every Cover Order in Order Book which can be modified later also. By this you could modify you stop loss triggering point. For Example. If the stock has already rose to 4% but you dont want to exit the position, then you could modify the cover order to increased price. Through this you could ensure your profit and still could wait further for the stock prices to go up. If it goes down you could take your profit as stop loss gets triggered at new value.
3. Higher leverage
Exit cover order can be done but at market price.
You can watch the detailed explainer videos about BO/CO and more here.
This might be a silly question but with the cover order we have to trail our stop loss manually … ( Because in BO the TSL gets updated automatically and that’s a really good feature) I requested Z team to add commodity segment to my account thinking I’ll have BO in commodity but learnt few mins ago that it’s not there… I am used to BO and I keep aggressive SL (coz I wanna protect my capital, one trade I loose small and another trade I gain big … that’s my mantra … Loose small and gain big) it’s a pity that we don’t have BO in commodity and I don’t wanna switch my broker … I am happy with Zerodha …
But one question though the leverage (double edged sword) is same for BO and CO?? Am I correct ???
Kindly reply my fellow traders