Measuring Targets With the Measured Move & Risk Management

The measured move is a way of projecting a target from the size of the pattern itself.

General rules per pattern

• Double top/bottom & head and shoulders: the pattern height from the peak/head to the neckline → project it from the breakout point.
• Triangle, wedge, rectangle: the widest height of the pattern → project it from the breakout point.
• Flag/pennant: the length of the "pole" → project it from the breakout point.

Combining it with risk management

1. Calculate the distance from entry → stop (risk / 1R).
2. Calculate the distance from entry → the measured move target.
3. If the ratio is at least 1:1.5–1:2, the pattern is worth considering. If it is lower, skip it.
4. Consider taking partial profit at the measured move target and trailing the rest along the structure.

Key points

• Targets must be set before you enter, from the size of the pattern — not from hope.
• If the risk/reward ratio is not adequate, the best decision is often not to enter.