Question about hedging w OTO orders
Have a day trading related question and didn't want to bother with the candlestick readers at Reddit so looking to get an answer by someone in the industry. I noticed how effective of a strategy OTO orders can be compared to a traditional stop loss. For example if I buy stock XYZ at $20 with the intent of selling at $22, and place an OTO Sell with a limit at $19.75 and stop-loss at $20, I just hedged my entire trade for a $.25 loss + cost of short selling, at a much cheaper price than a put option would have for a volatile stock. If I expect the long position to close at $22 within 1-2 weeks, which keeps cost of borrowing at a minimum, this is an excellent trading strategy from risk-reward and expected return POV. Sounds too good to be true, what am I missing here?
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