Generally, there's an inverse relationship between win rate/stop size, i.e., small losses = lower winrate and vice versa.
Tight stops require relatively large winners in order to offset all the small losses (which do add up).
Larger stops should increase your win rate, but once in a while (or often depending on your skill) those large stops will be hit, too. And you may very well take a large stop which eats into a big bulk of your profits (and then some).
Another option is to scale into trades and not go all in at once. This gives you a bit more leeway.
In the end, I think price action or your trade hypothesis/signal should guide your stop placement.
Simple example:
You bought (or want to buy) near a swing low anticipating an upmove. If this swing low is breached to the down side, you were wrong. So, depending on where you entered, you should have your stop below that swing low. If you enter in the middle of nowhere, you're more exposed and would require a fairly large stop just to stay in the trade inside all the 'noise'. Also, if you entered in the middle of nowhere, the profit potential is smaller, too.
It may be then that you decide to not take the trade because your stop would be too wide according to your risk criteria. It's little use to simply use a small stop for the sake of it if the chances are high it will get hit.
Personally, let's just say that in the past I've gotten stopped out of a great many moves - only to watch price go in my anticipated direction. So, I've been more successful using wider stops. However, as a result I've taken some larger losses, too.
The best answer is probably what @virtusa alludes to, i.e., improve your entries and create a system where you can consistently use smaller stops. Add also the important ability to be able to skip a poor trade and wait for the next good opportunity.
Tight stops require relatively large winners in order to offset all the small losses (which do add up).
Larger stops should increase your win rate, but once in a while (or often depending on your skill) those large stops will be hit, too. And you may very well take a large stop which eats into a big bulk of your profits (and then some).
Another option is to scale into trades and not go all in at once. This gives you a bit more leeway.
In the end, I think price action or your trade hypothesis/signal should guide your stop placement.
Simple example:
You bought (or want to buy) near a swing low anticipating an upmove. If this swing low is breached to the down side, you were wrong. So, depending on where you entered, you should have your stop below that swing low. If you enter in the middle of nowhere, you're more exposed and would require a fairly large stop just to stay in the trade inside all the 'noise'. Also, if you entered in the middle of nowhere, the profit potential is smaller, too.
It may be then that you decide to not take the trade because your stop would be too wide according to your risk criteria. It's little use to simply use a small stop for the sake of it if the chances are high it will get hit.
Personally, let's just say that in the past I've gotten stopped out of a great many moves - only to watch price go in my anticipated direction. So, I've been more successful using wider stops. However, as a result I've taken some larger losses, too.
The best answer is probably what @virtusa alludes to, i.e., improve your entries and create a system where you can consistently use smaller stops. Add also the important ability to be able to skip a poor trade and wait for the next good opportunity.
