What's your advice for Risk/Reward on this trading strategy?

I have been trading this strategy for some time now, a few weeks, and i am getting around 50% wins/losses, which i'm learning to deal with. Obviously though to take advantage of this low figure, i need to implement a good risk to reward ratio. How would you suggest i do it for this strategy?

As pictured i'm trading divergence, and the signal i get for my trade is when the stochastic makes a cross from overbought or oversold. I'm trading on the H4 charts and i have tried placing a stop at the end of the signal candle but a lot of the time it seems a bit short and i get stopped out. How would you optimize this strategy for Risk to reward? any feedback would be helpful.




Thanks

I'd go for a 1:1RR for half of your position, then trail the rest of the position via swings/basic price action.

Hope that helps!

The problem i have is, i don't know where to put my stop loss

You could use volatility to calculate your stops then trail or set target profit based on R multiples (multiples of risk). That's how I manage my 4H trade strategy.

Put on an ATR indicator (you can drag it onto the same window as the stochastics window) then when you get a signal set your stop to the ATR (I use the default 14) or ATR * 0.5 or 0.75 - you can backtest a good % of volatility for your system.

For TP you could trail manually - eg get to BE at 1R, lock in 1R when it reaches 2R etc - or set hard TP at 2-3R or more depending on how the set up looks. If it's in a trend direction you might want to target more or trail - if it's heading into a strong level or counter trend you might want to set a hard TP at (at least) 2R.

This is how I manage my trades - play around with some backtests and see what works for you.

GL

Why not the traditional approach?

Place your stop just below the previous low if going long or just above the previous high if short.