A ship's signal book catalogs every flag, its meaning, and when to hoist it. This calculator does the same for candlestick patterns: it catalogs the historical edge of each formation and calculates the position size that respects both your edge and your risk tolerance.
Pattern Probability Reference
| Pattern | Type | Common | Efficiency | Win Rate |
|---|---|---|---|---|
| Mat Hold (Bullish) | Continuation | J+ | I | 78% UP |
| Mat Hold (Bearish) | Continuation | J+ | I | 78% DOWN |
| Abandoned Baby | Reversal | J+ | A- | 70% UP |
| Bullish Separating Line | Continuation | H | D | 72% UP |
| Tower Bottom | Reversal | F | D | 67% UP |
| Tower Top | Reversal | E | D | 67% DOWN |
| Stick Sandwich | Reversal | F- | B | 62% / 38% |
| Tri Star Doji | Reversal | H | H | 52% UP |
| Thrusting Line | Continuation | F | B | 57% DOWN |
Position Size Calculator
Your Account
The Pattern
How This Works
The Math:
- Dollar Risk = Account Balance × Risk %
- Position Size = Dollar Risk ÷ Stop Loss %
- Expectancy = (Win Rate × Reward) − (Loss Rate × 1)
- Kelly % = (Win Rate − (Loss Rate ÷ Reward)) ÷ Reward
Worked Example
Scenario: You spot a Bullish Mat Hold on the daily chart of a $50 stock. Your account is $25,000. You risk 1% per trade ($250) with a 4% stop loss.
- Position Size = $250 ÷ 0.04 = $6,250
- Shares = $6,250 ÷ $50 = 125 shares
- Expectancy = (0.78 × 2) − (0.22 × 1) = +1.34R per trade
- Half-Kelly = 27.5% → use 1-2% risk for safety
Over 100 trades, this edge compounds. The Signal Book does not predict the next trade — it ensures you survive long enough for the edge to manifest.
Apply these probabilities: Use the Mat Hold's 78% edge from The Three-Day Gale, or the Engulfing patterns from The Turning Tide.