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Nosebleeds (epistaxis) are an extraordinarily common and essentially harmless feature of childhood. The fundamental cause of nosebleeds is trauma to the nasal septum membranes (OK, I'll say it: nosepicking). The septum is the middle part of the nose between the nostrils. The membranes of the entire nasal cavity, but especially the area of the septum just inside the nostrils are provided with a very rich blood supply. Anything that irritates these membranes such as cold dry air in winter, colds, or allergies can produce both the desire to rub or pick at the nose and also conditions conducive to rupture of the myriad of tiny vessels in the area of the nasal septum.
As for management of nosebleeds, first of all try to keep the child from sniffing back and swallowing large amounts of blood. It will only make him vomit blood all over the rug and upset you terribly. Have him sit upright and lean forward a bit, and if possible have him blow the clots out of the nose. Then pinch the nose shut for five minutes by the clock. This is to prevent a large clot from later breaking loose and restarting the nosebleed.
It is essentially impossible to keep a child from rubbing or picking at the nose, however, you can reduce the urge by keeping the nasal membranes moistened with Vaseline® or Neosporin® ointment several times a day (Neosporin because sometimes localized bacterial infection can contribute to the nosebleeds). Do this for several weeks after the nosebleed to allow time for full healing of the membranes.
If there is a family history of "free bleeders" or bleeding problems after surgery, etc. and your child has significant nosebleeds, your doctor may want to investigate for a bleeding disorder. Very rarely, there is a type of hereditary birthmark made up of blood vessels (telangectasia) that can cause bleeding. And if the nosebleed is not just blood, but stinky pus, think of a nasal foreign body.