I’m doing demos on the daily time frame, and place buy or sell stop orders on all my trades. One thing I’m trying to get a handle on is how far ahead of the setup candle I should I place my entry. Lots of traders say “a few pips,” but that’s not good enough for me. I don’t like being sloppy. I love quantification.
I know that entry placement will vary, perhaps among other factors, with the ATR, which itself varies from time to time and pair to pair; but if someone can help me quantify a reasonable distance ahead of the setup candle, or at least provide a rule of thumb, I’d appreciate it. I don’t want to get so far ahead of the setup candle that I’d lose too many pips, but neither do I want it to be so close to the candle to not serve its purpose, which is to demonstrate momentum in the direction I hope that price will take.
Usually when I’m calculating stuff like entry point (depending on your strategy since we’re all different) I like to add in the spread & some “breathing room” as far as in pips. I don’t like getting triggered by the the smallest margin just for it to swing on me. It’s hard for me to give a numerical value though as it differs from what the charts are saying to me. I’d say this I usually let one candle pass as “confirmation” before I trigger the set-up. I rather be late to the profit party & cash in on a few chips rather than lose the whole batch.
You could use a fraction of ATR20. This is a widely used time-span for a widely available indicator and would take account of recent volatility. As for what multiple, dunno, its perhaps going to be trial and error - say start with 0.5 x ATR20 and work back.