Cover orders have two legs: the main leg and the stop loss leg. The first leg is used to take a position, while the second leg is triggered only when the stop-loss price is hit. The order is available only for intraday and both delivery trades.

Let’s understand with an example. Suppose you wish to buy Abbott India shares for one session, but don’t want to take an unlimited loss and hence decide to place a stop loss for your trade. Using normal order types, you will need to execute two orders – the first being a buy order and another limit sell order to set a stop loss. A cover order (CO) reduces this to just one order.

o place a cover order, search for the stock and add it to Market Watch. Hover your cursor over the stock and select B to buy and S to sell. Make sure you select intraday and then CO. Select either market (MKT) or limit (LMT) for the first leg of the order and then enter the buy price if you select LMT.

You can then enter details for the second leg of the order filling in the stop-loss price. You can also place stop loss in terms of percentage or price difference. If the stop loss is not hit during the session and you don’t square off the position, the system will cancel the stop loss order and square off your position by 3.15 pm.​