Why a Tight Stop Is Not Always Better

A small stop can make the risk per contract look attractive.

But if the stop sits inside normal market noise, a trade may be stopped out before the setup has a reasonable chance to develop.

A wider stop isn't automatically better either. It increases the dollar risk unless position size is adjusted.

I first identify the price level that invalidates my setup. Then I calculate a position size that fits my risk limit.

The stop should make sense for the trade, not simply look small.