how much should i risk on going with a move that might be a head fake 
by definition a head fake is countertrend so you need to be prepared with tight stop losses in case it is in fact a head fake in terms of how much to risk a quarter to a half of your usual position is conservative and reasonable to go with a potential head fake set up due to the tenuous nature of the scenario that way you re committing only a relatively small portion of your risk capital to the breakout trade and keeping tight stop loss orders to minimize losses the bottom linea head fake refers to a false breakout of a significant technical level for example the current price trend is higher a head fake occurs when a move lower below key support occurs and catches the market flat footed which can lead to outsized moves on the break of that technical level head fake price action is all too common in markets and represents a counter trend breakout most often at a significant technical price point a key element to consider in deciding whether to go with the breakout or if it s just a head fake is how much and for how long the break of the key price level lasts frequently the buying selling surrounding the break of a key price point is due to stop loss orders around a technical level once the stop loss buying selling is done there may be no real news to sustain the break on the other hand fresh news may have surfaced potentially leading to a counter trend movement and not a head fake that s why it s critical to be aware of any fresh news that could lead to a legitimate countertrend move or breakout if there is none it is less likely to be real breakout and more likely just a head fake 