Stoploss for this edge?

I’ve been working on an edge that trades on the hourly candles at a peak or valley when the stochastics crossover.

I can’t decide on what would be a good stop loss. I can’t just make it x percent, because that is based on money management and not if the trade indicated to me it wasn’t going in my direction.

I’ve found that I can make between +50 pips to +300 if the bottom or top the stoch crossed over at was extreme. (and the trade goes the way I think probable)

Here are my thoughts about a stoploss/indication (because trade went againt me from the entry) to get out so far:

  1. Get out if stochs straighted back out and head in original direction
  2. Get out at -30 (this is just a random amount of pips that seems past the breathing room) So, far I’ve had it go about -20 pips againt me and come back and go the way I thought was probable.

If anyone has anything easy to do to add to this to help me read when to get out and see how far profit would go I would appreciate it.

Had a +50 trade this morning to all the way to +250 if I had just stayed in and waited, but I got out when price stalled and seemed to go back a bit.

I’m working on a Strategy that factors in the Currency Pair’s ADR (Average Daily Range).
My initial TP is the ADR/4 – in my case that’s generally 30 to 50 PIPs.

I use a 30 minute chart for the setup.
Once I enter:
[I]My SL is ADR/3[/I]
This is based on my assumption that price [I]could[/I] go for me a quarter of the ADR or against me a quarter of the ADR+Slippage within the next hour immediately after I enter.

[U]Speaking to your Item #2 (below)[/U]
I use 15 minute candles to “manage” my trade.
If price is driving toward the SL (ADR/3) I’m not worried because I’ve already factored the SL in Pips into how much money, and therefore lot size, I’m risking. Generally no more than 1% of account size (no balls).

I use the 15 minute candles to “watch” TP(s) as well but thats not what your question was about.

Your #1 seems to be based purely on Price and is as arbitrary as my ADR/4. A little Gut Feeling + A little common sense but not science.
Your #2 (if someone can give you an answer) is based on pure technical analysis. I’m looking forward to someone coming up with solution.

Thanks for the feedback. I’d considered looking at ADR for SL & TP, but coulnd’t take the ADR and use in a way that seemed relevent to what was happening at the moment of the current trade. Your calculations seem reasonable I think I’ll check it out over some backtesting and see if it figures in nicely with the edge I’m trying to develop.

P.S. Your 1% doesn’t indicate no balls, it indicates good money/risk management for noobs like us. We risk less and get to trade longer and learn something along the way. I know I’ll only risk more when I know I’ve developed an edge that works well and I can execute without prejudice.