The issue of big stop losses and small stop losses!
The advantage of a big stop loss is a high tolerance for error, while the disadvantage is that the loss per trade is large.
The disadvantage of a small stop loss is that it triggers frequently and has a low win rate. The advantage is that the loss per trade is small and is psychologically easier to accept.
Some friends also say, I want a small stop loss and big profits. Well, in this world, there are still miracles and lucky breaks. Those who buy two-dollar lottery tickets hoping to win five million in prizes are thinking of making small investments for big rewards.
Taking a total stop loss amount of 1 million as an example: (assuming both have the same margin)
1. Set the single stop loss at 1 million. Then your win rate will be very high, for example, 9 wins and 1 loss.
2. Set the stop loss at 100,000 each time. Then your win rate is generally 6 wins and 4 losses.
Similarly, if you trade ten times, with a stop loss amount of 1 million each time. Which is better?
The conclusion is: you must choose your preferred stop loss amount based on your personality, strategy, and countless tests. I have proven through years of practice that a small stop loss suits me, but it may not suit you.
