A tighter stop is not automatically safer, and a wider stop is not automatically more dangerous. Even the same -2% stop can mean very different risk depending on volatility, leverage, position size, and trading costs.
If it's too narrow, it may get clipped even by normal fluctuations.
A very tight stop on a volatile asset can be hit by ordinary short-term noise even when the directional thesis is right. That can lower the win rate and increase re-entry costs.
If it is too wide, one loss will be large.
A wider stop can quietly turn into a “just keep holding” rule. If position size stays unchanged, account risk rises as well. Stop width and position size should therefore be designed together.
Fixed-percentage and volatility-based stops make different assumptions
Fixed-percentage stops are simple and reproducible. Volatility-based stops adapt to market conditions but introduce extra choices, such as how volatility is estimated and over what window. Either approach should be compared under the same out-of-sample rules.