SL’s are for exactly whatever reason you use them for. Deep SL’s are for extreme circumstances, such as the examples you’ve given.
Nearby SL’s are often used to keep a trade from costing too much if the market moves away from profitable levels. “Wrong” is rather harsh and biased wording for a trade where the price action merely moved far enough from your entry and thus triggers the stop and limits the trade loss. It could easily reverse, and proved you were “Right” about the trade, but I’d guess you would then say the trader was “Wrong” about the entry. Or, in fact they were “wrong” about the trade, but “right” to put in an SL and stop it going further against them?
(Imo, it’s just part of the volatility and uncertainty in the market, but I guess you’d prefer labelling all this activity judgementally by being ‘right’ or ‘wrong’. I just say some trades work and some don’t. )
As for support and resistance…aren’t these the levels that you check to see whether the price will rebound off of them, or push through? Therefore, wouldn’t you place a sell SL above or below (and far enough away) from a resistance level?
Also, aren’t these levels bound to be tested by the market, shifting nearby, to, just past and around? Using these as your areas for SL’s sounds crazy. Aren’t these areas generally like magnets, where the price will seem to be ‘pulled toward’ the level, once it gets close enough? Even the names themselves suggest a place that will affect the market movement.
Can’t say I agree with you on this.