Dilligaff2, your logic makes sense. But the bad news is that stops are an art and not a science. There is no perfect stop loss. I use a 20% trailing on my derivative trades and on straight shares I generally use 5-8% depending on the share that I am in. I will also revert to a lower low on end of day price (when long) as a stop and this is classic trend reversal (Dow Theory).
The point with a stop loss system is two fold. First - you have to have one - without you will go broke. Secondly there is no perfect one that always works 100%. Sometimes you'll be stopped out only to see the stock tear off in you expected direction, but without you. And sometimes you widen it to keep you in a trade but still get stopped out, but at a bigger loss.
You can also look at some TA theories such as average true range (ATR), Elders safe stop (or is it van tharp?).