New BO or climactic end of trend

Hey Casper,

I believe there is not an actual way to know it before the BO really leads to a trend or fails. You take this type of trade knowing that it is probably going to fail and you compensate that with good risk/reward.

I think managing it would be difficult, because you probably have to be quick to get out depending on how the market behaves. But I would use a small stop, like above the bar with the first sell mark, and choose a MM down 3 or 4x my risk. I would also be willing to hold it for longer if the bear trend is strong.

Hi Casper,

As per the slide it's only 25% chance that such a BO will actually succeed. By a BO succeeding Al usually means it will initiate a new market cycle "BO - CH - TR - BO". The nice thing about low probability events succeeding is that they go far. And traders who take such need them to go far to compensate for the majority of times where such trades lose. The successful BO goes far because many bulls (including limit bulls) who were positioned wrongly end up dumping and all the bears who are surprised are forced to chase by selling at market. Together they cause the huge selloff. 

But usually this doesn't work, so position size needs to be smallest and stoploss right behind the start of BO bar and exit immediately 1t above a strong bull reversal bar. It's a swing, so as per BTC most such trades will end up with a little profit or a small loss and that's OK since they addup to 0 overtime anyways. Once in a while you score a huge win. Target should be at least 1:2 since this is a low probability trade. 

Hope that helps,
CH

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