The Abandoned Baby Meets Position Sizing: A Plot Twist That Could Save Your Trading Account

When a Candle Pattern Ghosts You… Ever feel like the market is flirting with you, only to ghost you at the worst moment? That, my friend, is the abandoned baby candlestick pattern. It shows up with all the signals of a reversal, whispers sweet nothings like “Go long,” and then—poof—vanishes into thin air, leaving your stop loss shattered and your confidence bruised.

Now, imagine this heartbreak happening without position sizing. That’s like bungee jumping without a cord because someone on Reddit said, “You’ll bounce.” Spoiler alert: You won’t.

Let’s deep-dive into how to spot the abandoned baby without being one, and why strategic position sizing isn’t just risk management—it’s survival.

The Candlestick Pattern That Should Come With a Warning Label

The “abandoned baby” pattern is a rare but powerful reversal formation that typically signals a strong shift in trend direction. Think of it as the plot twist in your favorite thriller—except this time, your money’s on the line.

• What it Looks Like:
  • A long candle in the direction of the trend (bullish or bearish)
  • A doji (or small-bodied candle) that gaps away from the previous bar
  • A reversal candle in the opposite direction

This lonely doji, marooned between two larger candles with gaps on both sides, is your signal. It’s saying, “Hey, something’s not right.” And it’s usually right.

But here’s the twist: it’s not always trustworthy.

Expert Insight: According to Steve Nison, the godfather of candlestick charting, “No pattern is infallible. Even a perfect-looking abandoned baby can fail in volatile markets or low liquidity conditions.”

And that’s where our not-so-secret weapon comes in…

Position Sizing: The Tactical Nuclear Button in Your Arsenal

Here’s the thing most traders don’t realize: it’s not the pattern that saves you—it’s how much you bet on it.

Position sizing is the art and science of controlling how much you risk per trade. It’s your parachute, your seatbelt, and your fire escape all rolled into one.

Why It Matters:

• Protects You From False Signals: Patterns like the abandoned baby can fake you out. Proper sizing means you lose a little, not a lot.
• Builds Emotional Discipline: Ever gone full throttle on a “sure thing” only to watch it nosedive? Sizing controls that impulse.
• Lets You Trade Another Day: One bad trade shouldn’t end your career. Sizing ensures your account survives the storm.

Case Study: A 2024 study by Forex.com found that traders who consistently used proper position sizing were 46% more likely to be profitable after 12 months compared to those who didn’t.

The Secret Math That Most Traders Avoid (At Their Own Peril)

If you’re using the abandoned baby without calculating your lot size first, you’re not trading—you’re gambling in a tuxedo.

Here’s a quick cheat sheet:

1. Determine Risk Per Trade: Usually 1-2% of your account balance.
2. Calculate Stop Loss in Pips: Based on technicals (ATR, structure, etc.)
3. Lot Size Formula:

Example: $10,000 account, 1% risk = $100. Stop loss = 25 pips, pip value = $10.

Pro Tip: Want it done for you? Use the Smart Trading Tool to calculate lot sizes instantly and take emotion out of the equation.

What Most Traders Get Wrong (And How to Flip the Script)

The abandoned baby is powerful, but most traders treat it like a golden ticket. The smarter move? Treat it like a “maybe,” not a “marry me.”

Common Mistakes:

• Entering too early without confirmation
• Going full position without proper risk control
• Ignoring economic news or session volatility

Flip It:

• Wait for confirmation on the next candle
• Position size based on account risk, not your gut
• Align it with market sentiment and macro drivers

Contrarian Nugget: Sometimes, the best play is not taking the trade—especially if the doji forms on low volume or during Asian session chop.

The Little-Known Timing Trick That Can Make or Break Your Setup

Ever catch a perfect abandoned baby—only for NFP to smash it like a toddler with a Lego tower? Timing matters.

Use these checkpoints:

• News Events: Avoid entries near high-impact announcements
• Time of Day: Prioritize London open, New York overlap
• Volume Confirmation: Use OBV or Volume Profile to validate conviction

Expert Quote: Kathy Lien, managing director of FX strategy at BK Asset Management, says, “Volume and timing can either validate or destroy the most beautiful technical setup.”

Underground Playbook: Abandoned Baby + Position Sizing Strategy

Want the elite approach? Here’s the 3-Step Ninja Setup:

1. Spot the Pattern
   • Only trust abandoned babies on the 1H or higher
   • Check for clean gaps and symmetrical formation
2. Cross-Confirm with Indicators
   • Use RSI or MACD divergence
   • Add volume confirmation (OBV or Tick Volume)
3. Size Like a Pro
   • Risk 1-2% max
   • Calculate lot size based on ATR-defined stop loss
   • Enter on confirmation candle with tight spread conditions

Optional Sauce: Use a trailing stop once price breaks the midpoint of the reversal candle to lock in early profits.

Summary: Elite Tactics That Change the Game

• The abandoned baby is rare but powerful—just don’t trust it blindly.
• Position sizing is your insurance policy when patterns misbehave.
• Cross-verify with volume, timing, and macro context.
• Use a formula, not FOMO, to determine lot size.

Tools to Elevate Your Game:

• Smart Trading Tool: Calculate lot sizes instantly
• Free Trading Plan: Create structure around entries and exits
• Free Trading Journal: Track performance with precision
• Join the Community: Get alerts, setups, and coaching in real-time

Got your own abandoned baby horror story? Share it in the comments—or better yet, tell us how you turned it into a win!

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Image Credits: Cover image at the top is AI-generated