Every pattern in this course — every single one — reduces to the same two questions:
- Where does it resolve? Which level, if broken, means the pattern has played out?
- Where am I wrong? At what price is the idea clearly dead, regardless of how much I like it?
Almost every pattern mistake beginners make is a failure to answer the second question before entering.
Breakout, or just a poke?
The distinction that matters is the close, not the touch. Price poking a few pips through a level on a wick is extremely common and means very little. Price closing beyond the level means the buyers or sellers actually held their ground into the end of the period.
This is why the false-breakout lesson later in this course exists. Wick-throughs are not breakouts, and treating them as breakouts is the most expensive habit in pattern trading.
Invalidation is not the same as a stop
A stop is where you exit because of your risk limit. Invalidation is where the reason for the trade no longer exists. They often sit near each other, but they are different ideas, and conflating them leads to moving stops around to avoid being wrong.
For a double top, invalidation is a close back above the second peak — at that point there is no double top, just a higher high. Wherever that price is, that is where you admit the pattern failed.
The waiting is the hard part
Patterns take time to resolve, and the temptation is to enter early because the shape looks complete. It is not complete until the level breaks. Entering early feels like getting a better price; what it actually does is remove the only piece of evidence the pattern was going to give you.
How to check this yourself
Before any pattern trade, write three numbers on paper: entry, invalidation, and target. Then work out what percentage of the distance from entry to target you are risking. If you cannot fill in all three without hesitating, you are trading a hunch that happens to be shaped like a pattern.