The comfort of a tight stop
Posted: Fri Oct 30, 2026 9:13 am
The comfort of a tight stop
Tight stops feel safe. A two-pip stop means a two-pip loss. Surely that is conservative.
The trouble is the frequency. A two-pip stop on a pair with a typical one-minute range of three pips gets hit by noise constantly. The loss per trade is small. The number of losses is large. And each trade pays the spread.
Over a hundred trades, a tight stop can cost far more than a wider one that is hit less often. A stop of five pips with a 40 percent win rate might outperform a stop of two with a 25 percent win rate, depending on the target.
The psychological comfort of the small loss hides the larger cumulative cost.
A direct test: compare strategies with different stop sizes using realistic costs. The result often favours wider stops than expected.
Has the stop distance been tested against the actual noise level of the pair, or was it chosen because it felt comfortable?
Tight stops feel safe. A two-pip stop means a two-pip loss. Surely that is conservative.
The trouble is the frequency. A two-pip stop on a pair with a typical one-minute range of three pips gets hit by noise constantly. The loss per trade is small. The number of losses is large. And each trade pays the spread.
Over a hundred trades, a tight stop can cost far more than a wider one that is hit less often. A stop of five pips with a 40 percent win rate might outperform a stop of two with a 25 percent win rate, depending on the target.
The psychological comfort of the small loss hides the larger cumulative cost.
A direct test: compare strategies with different stop sizes using realistic costs. The result often favours wider stops than expected.
Has the stop distance been tested against the actual noise level of the pair, or was it chosen because it felt comfortable?