Guide to Day Trading Strategies

H O W T O D A Y T R A D E
101
use the bottom of that candle as my stop and the top of that candle as either my entry point or 
my double up point. I will only take this trade if there is still 30 cents of pro
À
t potential to the 9 
EMA, using the 
À
ve minute chart. If I already have a half sized position based on the one minute 
chart, I will double on 
À
ve minute con
À
rmation. When I double my position, I am increasing my 
risk, that means I need to tighten up my stop to either break even or -10 cents. It’s important to 
watch the one minute chart when you enter a 
À
ve minute reversal. If there have already been 
À
ve consecutive green candles on the 
À
ve minute chart, there is a risk that you may be chasing 
the reversal too much.
Chart showing a one minute candle making a new high several times (1), when this 
happens we need to wait for consolidation above the lows (2) and then 
À
 nally a 
break of the high of the consolidation (3). Until we have (3) there is no entry.

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R O S S C A M E R O N
102
Buying the First Pullback of Reversals
One of the safest reversal strategies is buying the 
À
rst pullback after con
À
rmation. There are 
times when the one minute or 
À
ve minute chart is too choppy during a downtrend to take a 
position on the 
À
rst candle to make a new high. In this case, there are two options. One is to 
simply pass on the reversal and wait for a better opportunity, and this may be a good option for 
new traders who prefer stronger con
À
rmation before entering trades. My preferred technique 
is to buy the 
À
rst pullback on the one minute chart or the 
À
ve minute chart. In the example of 
AVGO, you can see that the one minute chart showed several one minute candles making a new 
high. If you took each of those trades, you would have had four back to back losses until you hit 
a winner. In the section where we discussed one minute entries, we emphasized the importance 
of at least 5-10 consecutive candles, which AVGO did not have. In this type of situation, I keep 
reversal stocks on watch and wait for the one minute or 
À
ve minute candle to make a new high 
(1), and then consolidate above the lows showing that support has been found (2), and then 
À
nally break the high of the consolidation (3). I enter at step (3), with a stop at the bottom of 
the consolidation. This entry provides the best balance of a tight stop and con
À
rmation that the 
reversal is beginning. In the example of AVGO, the point where we saw the breakout from the 
consolidation coincided almost perfectly with the 
À
rst 
À
ve minute candle making a new high. 
AVGO also showed (3), as being the 
À
rst time the one minute candle broke the 20 EMA, since 
the selloff began. When I am looking for pullback opportunities on reversal trades, I use the 
same stock scanners as when I am looking for the 
À
rst one minute or 
À
ve minute candles to 
make a new high.