measured move target meaning

A measured move target takes the height of a chart pattern and projects it from the breakout point — a stock ranging between ₹380 and ₹440 that breaks upward has a ₹60 height and so a ₹500 measured target. The reasoning is that the energy stored while price went sideways tends to express itself in a move of comparable size. It is a way of sizing up a trade in advance, not a forecast of where price will actually go.

the height of a chart pattern projected from the breakout point gives

The measured move target. Measure the top-to-bottom distance of the formation — a rectangle, a triangle, a head and shoulders — and add it to the breakout level for an upward break or subtract it for a downward one. Its real job is answering, before you enter, whether the possible reward justifies the risk being taken.

can I take partial profit at a target and trail the rest

Yes, and booking part of the position at a measured target while trailing the remainder is a common middle path among discretionary traders. It gives up some expectancy compared with pure trend following and buys the ability to sit through a pullback on the rest without panicking. A rule that actually gets followed tends to beat a theoretically better one that gets abandoned in the first drawdown.

how often can you be wrong at 4 to 1 reward to risk

Three times out of four and you are still ahead — three losses of one unit each are more than covered by a single four-unit win. That arithmetic is the whole reason for computing the target before entering rather than after, because a setup offering only 1.2 to 1 needs you to be right most of the time. Reward to risk is the distance from entry to target divided by the distance from entry to stop.

why do trend followers not use profit targets

Because trend-following returns come from a small number of very large winners, and a fixed target caps exactly those trades while doing nothing about the losers. Over twenty trades with the same 40% win rate, cutting two 12R runs down to 3R each can turn a +21R result into +12R. The approach depends entirely on that asymmetry, so capping the upside inverts the thing that makes it work.

Where to take profit · Market Vidyalaya

Every trader can tell you why they entered. Ask where they intend to exit a winner and the answer is usually vague — which is odd, because the exit is what converts a good analysis into money.

The four methods

Method	How the target is set	Suits
Measured move	Project the height of the pattern from the breakout point	Chart patterns — rectangles, triangles, head and shoulders
Structure	The next significant level — a prior high, a gap, a round number	Range-bound and swing trading
Multiple of risk	A fixed 2R or 3R from entry, based on the stop distance	Systematic trading where consistency matters more than optimality
No target, trail instead	Ride until the trailing stop is hit	Trend following, where the large winners pay for everything

The measured move

The most common pattern-based target. Measure the height of the formation and project it from the breakout point — the logic being that the energy stored in a range tends to express itself in a move of comparable size.

Worked example

A rectangle breakout

A stock ranging between ₹380 and ₹440

Range height₹440 − ₹380₹60

Breakout pointClose above the top of the range₹440

Measured target₹440 + ₹60₹500

StopBack inside the range invalidates the breakout₹425

Reward to riskThis is what decides whether the trade is worth taking60 ÷ 15 = 4:1

The target is not a prediction. It is a way of asking, before entering, whether the possible reward justifies the risk — and 4:1 means you can be wrong three times out of four and still be ahead.

Loading interactive demo…

Set entry, stop and target, then vary the hit rate. A 4:1 setup and a 1.2:1 setup demand completely different accuracy to be worth taking.

Why trend followers avoid targets

Trend-following returns come from a small number of very large winners. A fixed target caps exactly those, while doing nothing about the losers — which inverts the asymmetry the whole approach depends on.

Worked example

The same twenty trades, two exit rules

8 winners, 12 losers, losses capped at 1R

Fixed 3R target= +12R8 × 3R − 12 × 1R

Trailing stop6 × 1.5R + 2 × 12R − 12 × 1R = +21RMost winners 1–2R, two run to 12R

Win rateThe difference is entirely in the tailIdentical at 40%

What the target removedCapped at 3R each instead of 12RThe two trades that paid for the year

The fixed target produced a smoother, more satisfying equity curve and considerably less money. This is the trade-off, and it should be made deliberately rather than by default.

Choosing between them honestly

Use a target

Range-bound or mean-reverting setups
You cannot sit through giving back an open profit
Shorter holding periods where trends do not develop
You want predictable, repeatable outcomes

Trail instead

Trend-following in a trending regime
You can tolerate returning 30% of an open gain
Longer holds where large moves are possible
Your expectancy depends on a few big winners

Check yourself

A rectangle between ₹200 and ₹230 breaks out upward. Where does the measured move target sit, and what is the reward-to-risk if the stop is ₹222?

Simple bhasha mein

Nikalna kahan hai, pehle tay karo

Bus mein baithne se pehle stop pata hota hai. Trade mein log ghusne pe ghante lagate hain aur nikalne ka plan hi nahi banate. Target isliye nikaalte ho ki pata chale sauda karne layak hai bhi ya nahi — 4:1 hai toh chaar mein se teen baar galat hoke bhi aap aage ho.

What to remember

The exit converts analysis into money; compute the target before entering.
A measured move projects the pattern height from the breakout point.
The target’s real job is deciding whether the reward justifies the risk.
Fixed targets cap exactly the large winners trend following depends on.
Never combine a fixed target with a negotiable stop.

You reached the endMark it done and keep your streak going.

Up nextReading a strategy report Previous: Effort versus result

Finished this lesson?

Mark it done to track your progress through the curriculum.

Common questions

Short, direct answers to what people ask about this topic.

measured move target meaning: A measured move target takes the height of a chart pattern and projects it from the breakout point — a stock ranging between ₹380 and ₹440 that breaks upward has a ₹60 height and so a ₹500 measured target. The reasoning is that the energy stored while price went sideways tends to express itself in a move of comparable size. It is a way of sizing up a trade in advance, not a forecast of where price will actually go.
the height of a chart pattern projected from the breakout point gives: The measured move target. Measure the top-to-bottom distance of the formation — a rectangle, a triangle, a head and shoulders — and add it to the breakout level for an upward break or subtract it for a downward one. Its real job is answering, before you enter, whether the possible reward justifies the risk being taken.
can I take partial profit at a target and trail the rest: Yes, and booking part of the position at a measured target while trailing the remainder is a common middle path among discretionary traders. It gives up some expectancy compared with pure trend following and buys the ability to sit through a pullback on the rest without panicking. A rule that actually gets followed tends to beat a theoretically better one that gets abandoned in the first drawdown.
how often can you be wrong at 4 to 1 reward to risk: Three times out of four and you are still ahead — three losses of one unit each are more than covered by a single four-unit win. That arithmetic is the whole reason for computing the target before entering rather than after, because a setup offering only 1.2 to 1 needs you to be right most of the time. Reward to risk is the distance from entry to target divided by the distance from entry to stop.
why do trend followers not use profit targets: Because trend-following returns come from a small number of very large winners, and a fixed target caps exactly those trades while doing nothing about the losers. Over twenty trades with the same 40% win rate, cutting two 12R runs down to 3R each can turn a +21R result into +12R. The approach depends entirely on that asymmetry, so capping the upside inverts the thing that makes it work.