The moments after a change of character are some of the hardest to trade, because the evidence is genuinely mixed. A good plan accepts that and decides in advance how to behave.
Three honest options
- Stand aside. Wait for more information. If price breaks structure in the new direction (a BOS), that is stronger evidence of a shift. If it recovers the broken level, the old trend may be resuming. Waiting costs you a possible entry; it does not cost you capital.
- Reduce exposure. If you are already in a position that was working, a CHoCH is a reasonable moment to review your stop or take partial profit according to your plan.
- Trade the idea with small size. If your tested plan includes trading CHoCH ideas, size them so that being wrong is cheap. Uncertain setups deserve smaller risk, not larger.
Decide in advance what proves you wrong
Before acting on a CHoCH, answer: at what price is the idea clearly wrong? For a bearish idea after an uptrend broke down, that is often above the high that preceded the break. If you cannot name that price, you do not have a trade.
Beware confirmation bias
Once you have decided a trend is reversing, every candle will seem to support it. Write down your reasons before you act, and read them again if price moves against you.
Accept missed trades
You will see reversals you did not trade and reversals that failed which you did. Neither outcome is a reason to change a sound process. Judge yourself on whether you followed your plan.