The following is an extract written by Nick McDonald which featured in a book titled 'Stop Orders' by Tony Loton, published recently by Harriman House. See bottom of this page for a link to the book on Amazon.
I have met many self-proclaimed ‘conservative’ traders who think that the use of wide stops is what makes their trading conservative. They state that this approach means their stop is “less likely to be hit” and therefore it is a “sensible, more cautious approach”. They are correct on one thing, the stop is less likely to be hit. The stop, however, is just one factor in profitable trading and conservative does not always equal profitable. This is often conservative to the point of being detrimental to trading success!
