Gartley Pattern: A Complete Trading Plan with Numbers

The ratios define the pattern. The plan defines the trade. Most traders learn the ratios and skip the plan, which is why most Gartley trades lose money.

A Gartley completes at 0.786 of the XA leg, but knowing where D lands is not a trading plan. The framework below specifies every decision point — entry, stop, targets, sizing, and invalidation — so the pattern becomes a repeatable system.

Pattern qualification checklist

Before any trade, verify all four ratios:

• AB = 0.618 of XA (tolerance ±0.02)
• BC = 0.382–0.886 of AB
• CD = 1.272–1.618 of BC
• AD = 0.786 of XA (tolerance ±0.01)

If any ratio fails, it is not a Gartley. Do not "fix" the swing points to make it qualify.

The two-tier stop

• Hard stop: 0.25 × ATR(XA leg timeframe) beyond point X. If price closes beyond X, the geometry is broken.
• Soft stop: 0.5 × ATR beyond the 0.886 retracement of XA. If price breaches 0.886, halve the position and move the hard stop to break-even on the remainder.

The 0.886 breach is the early-warning line; many failed Gartleys blow through 0.786 to 0.886, then reverse. The soft stop removes half before the full stop fires.

Scaled entry

Split entry across three limit orders: 50% at 0.786 of XA, 30% at 0.809 (deeper fill), 20% at 0.840 (often unfilled). This lowers the effective entry by roughly 0.015 of XA — enough to matter on a pattern that often overshoots.

Three scaled targets

Target geometry from the CD leg, not XA:

• Target 1: 0.382 of CD. Scale 40%. Move stop to break-even on the rest.
• Target 2: 0.618 of CD. Scale 40%.
• Target 3: point A. Scale the final 20%, or trail with a 2 × ATR stop.

Typical risk-reward at the blended entry: 1:1.6 at target one, 1:2.8 at target two, 1:4.0 at target three. Blended, roughly 1:2.4.

Position sizing rule

Risk no more than 1% of account equity on the hard stop distance. Because the soft stop halves the position at 0.886, the effective maximum loss is roughly 0.7% even if the hard stop fires.

Worked example with numbers

Stock: X = $100, A = $80, B = $92.40 (0.618), C = $86.30 (0.618 of AB), D projected at 0.786 of XA = $84.28. Limit 50% at $84.28, 30% at $83.65, 20% at $82.95. Blended entry ≈ $83.94. Hard stop at $79.40 (0.25 × ATR below $80, ATR = $2.40). Soft stop trigger at 0.886 of XA = $82.28. Target 1: 0.382 of CD (CD ≈ $4.05) → $85.83. Target 2: 0.618 of CD → $86.78.

Risk per share ≈ $4.54 (entry to hard stop). Reward to target 2 ≈ $2.84 — below 1:1. The fix: only take the trade if target 2 offers at least 1.5 × the hard-stop risk. Here it does not. Skip the trade. The plan's value is exactly this — it tells you when to stand aside.

Invalidation outside the stops

1. Price gaps through D on the open by more than 0.5 × ATR.
2. A major scheduled news release lands between entry and target 1.
3. The CD leg completes on volume below 0.7 × V30 (no professional interest at the reversal).

The pattern is only as good as the plan wrapped around it. The ratios find the setup; the plan decides whether the setup is worth the risk.