Where do I put my stop and target on a pattern?

Question

Accepted Answer

The stop goes on the other side of the pattern, where the idea is wrong. The target is usually the pattern's height measured from the breakout. Then check that the reward is worth the risk. The stop Put it where the pattern would be wrong: just past the other side of it, or under the last swing low for a buy. If price gets there, the setup failed and you are out with a small, planned loss. The target The classic measure: take the pattern's height at its widest and add it to the breakout price (subtract it for a breakdown). Key levels above (or below) are natural places to take profit too. Is it worth it? Divide what you could make by what you could lose. 2:1 or better means you could make two dollars for every one you risk. Under 1:1, the trade does not pay for its losers. The Long position tool in Find Better Charts does this math for you as you drag the lines.