Correctly placed stops will enhance a system's performance.
No. Generally it will degrade system performance.
But I'm talking of a system where strategies get applied should the value of the position drop,
ie. roughly comparable to applying zero-delta-hedging with options.
In that case no stop loss gets used, the sole aim is rather fixated only on reaching the target stop.
By this method, if time wouldn't be a limiting factor, then one never would make a loss under normal market conditions.
But time is a limiting factor, so sometimes losses are unavoidable, but it is limited due to the "implicit hedging" mechanism
(like is the case with zero-delta; the loss is just the
delta difference to the last zero-delta, so to say...
).
("target stop" here means "profit stop")
