Stoploss for this edge?

Beginner Questions
1

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.

2

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.

3

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.