InvestorQ : How can I make maximum benefit of cover orders and brackets orders in intraday trading and how do they work?
Niraj Mehta made post

How can I make maximum benefit of cover orders and brackets orders in intraday trading and how do they work?

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Niraj Mehta answered.
3 years ago
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When you place an intraday order with a compulsory stop loss order tagged to it, and then it becomes a Cover Order (CO). If you place a simultaneous stop loss order and a profit booking order, then it is called a Bracket Order (BO). The CO and BO orders are essentially risk management mechanisms. They define your risk on either side and reduce the risk for the trader and the broker. As a result, the broker is willing to give you higher leverage if you place the intraday order as a CO order or a BO order. Remember, this higher leverage also comes with a higher level of risk which you need to be conscious of. The margin leverage offered for CO and BO orders is normally twice that of the MIS intraday order. So if you are getting 7X leverage on a stock under the MIS order facility, then your leverage can go up to 12-14X if you convert your order into CO/BO order. But bear in mind that it can work both ways. Intraday trading is all about managing your risk and getting the best possible leverage on your margins. Smart use of MIS orders and BO/CO orders can go a long way in helping you manage your intraday margins more efficiently. That is why they are so important.

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