Wave 4 C and the first segment of Wave 5, which one has a better risk-reward ratio? This question seems simple, but the real difficulty lies in rhythm control.

From a technical perspective, the short-term narrative has always revolved around Wave B—emphasizing that Wave B's rebound hasn't finished, which means there's a high probability of continued upward movement. From a swing perspective, a different rhythm expectation is given, suggesting that another Wave C is still possible in the future. The two viewpoints seem contradictory, but in fact, they are both saying the same thing: short-term continued rise, followed by a return to a downward swing in the wave cycle.

The real trading dilemma is here. In the contest between Wave 4 C and the first segment of Wave 5, one side must pay a price. Either getting caught at the top of Wave B or missing out on the rise of the first segment of Wave 5. Both outcomes are uncomfortable.

From a risk tolerance perspective, it’s necessary to weigh who can accept a larger retracement and who has lower participation costs. This is not just a matter of technical chart patterns but also a risk management consideration. Position size, stop-loss, and entry timing all need to be factored in to determine the true risk-reward ratio. The market only rewards traders who calculate this ahead of time.