Chart pattern calculator
From a chart pattern, work out the entry, stop-loss and measured target with its risk/reward ratio.
By the TradingCalculator.Pro team · Updated on · About us
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Formula
Target = breakout + pattern heightHow it works
Almost every chart pattern is measured the same way: take the height of the pattern and project it from the breakout point. On a head and shoulders the height runs from neckline to head; on a triangle, from the base to the first wave; on a flag, the whole pole. That projection is the measured target.
What turns that measurement into a trade is the stop, and that is where the pattern stops being a drawing. The stop goes where the pattern is invalidated — below the right shoulder, on the far side of the broken line, outside the range — not at a convenient distance. With entry, stop and measured target you have the ratio, and if that ratio does not reach what you demand, the pattern is fine and the trade is not.
What you get
- Entry, stop and measured target
- Pattern R:R ratio
- Built-in risk management
Worked example
Inverse head and shoulders: neckline at $41.80, head at $37.20, right shoulder low at $40.10. Entry on the neckline break.
- Pattern height: 41.80 − 37.20 = $4.60.
- Measured target: 41.80 + 4.60 = $46.40.
- Stop below the right shoulder: $39.90.
- Risk: 41.80 − 39.90 = $1.90 per share.
Risk $1.90, potential profit $4.60: a 1:2.42 ratio.
That 1:2.42 is the only thing that decides whether the trade happens. If the stop had to sit below the head, at $37.00, the risk would be $4.80 and the ratio would fall to 1:0.96 — the same pattern, just as valid as a drawing, and a trade not worth taking. The pattern proposes; the ratio disposes.
How to use it
- Enter your inputs: the terms of the formula (capital, risk, prices and stop).
- The calculator applies the formula and returns the result in your instrument's units.
- Check the breakdown before trading: anything that cannot be computed is shown empty, never as zero.
Frequently asked questions
How do you calculate the target of a head and shoulders?
Measure from neckline to head and project that distance from the breakout point. With the neckline at $41.80 and the head at $37.20, the height is $4.60 and the measured target $46.40. It is a statistical expectation: classic studies put measured-target fulfilment between 60% and 75% of the time, not always.
Where does the stop go on a chart pattern?
Where the pattern is invalidated, which is usually just beyond the last point that defines it. On an inverse head and shoulders that is below the right shoulder; on a triangle, past the broken trendline. Moving the stop closer "to risk less" does not reduce risk: it raises the odds of being taken out of a trade that was working.
Which pattern has the best risk/reward ratio?
Tight continuation patterns — flags and pennants — because the stop fits very close and the projection is the whole pole. Wide reversal patterns, like a multi-month double bottom, give larger targets but demand proportionally larger stops, so the ratio does not always improve. The answer depends on the specific chart, not on the pattern’s name.
Should I wait for the breakout or enter earlier?
Entering earlier improves the price and worsens the probability, and both have to be counted. Anticipating the break on the third touch of the range gives a tighter stop and a better ratio on paper, at the cost of trading patterns that may never complete. Entering on the confirmed break costs part of the move and removes the patterns that never break.
Does volume change the calculation?
It does not change the arithmetic of the target, but it does change the probability of reaching it. A breakout on volume well above average has historically better follow-through than one on flat volume, and a flag that forms on declining volume is the textbook version. Volume does not enter the formula: it enters the decision whether to apply it.