I hope someone can help here. If I set up a TOR relay, would this help in stopping a stalker from monitoring my traffic if for example he hacked into my router? If there is a lot of traffic coming in and out of my network would it be difficult to work out which one is mine? Either way, I would still like to set up a TOR relay but I am also trying to figure out the best way to maintain privacy
To defeat an attacker who is eavesdropping from your router you don't need to run a relay, you just need to use Tor as a client. They'd only see already encrypted traffic leaving the network.
Running a relay and a client may, under certain circumstances, make it more difficult for a purely passive observer to tell which Tor traffic is yours and which isn't. It wouldn't make it impossible, though.
In your scenario, an active attacker with control of your router, they could simply block inbound traffic to your Tor relay and then the remaining traffic could be determined to be yours alone. I don't think you'll gain privacy by running a Tor relay but using Tor as a client will already give you strong privacy. Your attacker could tell: That you use Tor, When you use Tor and How Much you use Tor.