Day Trading Strategy (reversals) for Beginners: Class 4 of 12 by Ross Cameron

Overview (Finance-focused reversal day-trading strategy)

Ross Cameron (Warrior Trading) explains a “reversal” day-trading strategy designed to trade stocks at stretched extremes. The approach uses a combination of:

• Bollinger Bands (price at band extremes / “rubber-band” stretch)
• RSI extremes (overheated conditions)
• Reversal candles (e.g., pin bars and dojis)

A key theme is avoiding the need to predict exact turning points. Instead, the trader waits for momentum to shift, then enters with tight risk controls and uses scaling/partial exits.

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Instruments / tickers mentioned

• ABY — main live example
• NFLX — mentioned in passing (near an all-time high)
• Mentions Pepsi (ticker not explicitly stated)
• Trade Ideas scanners — referenced for screening (no specific ticker)

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Key trade example: ABY (live)

Entry / risk

• Long entry: $21.42 (thousand-share sizing mentioned)
• Stop-loss: $21.22 area
  • Stated as about a $0.20 stop
  • Later mentions stop management

Exits / profit targets

• Partial profit / first exit: sold half at $21.83
  • Profit noted: ~$0.40
• Profit target(s) mentioned:
  • $22.50 (first target)
  • Nearby resistance/MA levels referenced:
    • $22.20 (9 moving average referenced)
    • $22.66 (20 moving average referenced)
    • VWAP referenced as another target-type area

Rationale

• The stock sold off to daily support around ~$21, then showed reversal behavior:
  • A Bollinger Band “ride”
  • Low RSI (extreme/oversold context)
  • A doji type setup was desired (not perfect in this illustration)
• Expectation: a snapback from an extreme.

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Strategy framework (step-by-step)

1) Universe / screening (scanners)

• Uses a scanner concept tied to (or resembling) Trade Ideas
• Mentions a “v5v8 hybrid reversal” scanner
• Screens for:
  • RSI extremes
  • Bollinger Band extremes
  • Consecutive candle patterns

2) “Extreme” qualification (setup selection)

Only trade when price is at a true extreme (stretched condition), such as:

• RSI above 90 or below 10
• A candle outside Bollinger Bands (rare, signals stronger extremes)
• 5–10 consecutive candles ending with a:
  • Pin bar or doji (indecision)
• Preference for:
  • Strong extension
  • High volume, often cited around ~500k+ shares (ideally ~1M)
  • Volume peaking at the bottom/top

3) Entry trigger

Bottom reversals (long-biased)

• Entry is the first 1-minute or 5-minute candle that makes a new high after consecutive lows.
• 5-minute chart often preferred for confirmation (cleaner structure).
• Stop placement:
  • Often at the low of day
  • If too far, may use an arbitrary ~20–30 cent stop

Top reversals (short-biased)

• Mirror logic:
  • After extension and a reversal candle near resistance, take a short
  • Stop often placed at high of day, then trail

4) Stop-loss rules

• Typical stop: low/high of day (as tight as possible)
• Alternative if needed: ~20–30 cents
• Core rule: stop distance determines share sizing

5) Exits / trade management

If price fails quickly

• If price pops then reverses back down → trader should expect to be stopped out

If price consolidates

• Sideways action / flags may signal the reversal is failing and can indicate continuation against the reversal:
  • Example: bear flag for longs

If price moves in favor

• In profit:
  • Adjust stop to break-even
  • Then to the low of the last 5-minute candle
  • Then trail upward
• Overall goal: “ride” reversal momentum
  • Avoid common mistakes:
    • Selling winners too early
    • Holding losers too long

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Risk management / portfolio approach

• Cap risk per trade: generally ≤ $500 worst-case
  • Sometimes as low as $200 for less confidence
• Position sizing: based on:
  • Stop distance
  • How much the trader is willing to lose
• Example given:
  • With a ~$300 loss scenario, the trader can size shares accordingly (larger size with higher risk tolerance)

Daily “cushion” discipline

• After several morning trades, if up $300–$500+, establish a cushion
• If that cushion is lost (example: +400 turns into +99):
  • Stop trading
  • Walk away green
• Emphasis: don’t allow the day to go from green to red

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Technical / indicator rules emphasized

• RSI
  • Extreme thresholds: >90 or <10
• Bollinger Bands
  • Look for price moving outside the bands (extreme condition)
  • Uses location / mean reversion toward moving averages and VWAP
• Candlesticks
  • Pin bar: long wick (bottoming/topping tail behavior)
  • Doji: indecision candle (ideal near reversal points)
  • Often wants consecutive candles followed by an indecision candle
• Volume
  • Preference for very high volume
  • Common targets cited: ~500k+ or ~1M+ shares
• Moving averages / targets
  • Mentions the 9 moving average, 20 moving average, and VWAP as resistance/target zones

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Key cautions / behavioral notes

• Reversal trading needs discipline because:
  • Momentum shifts are hard to time precisely
  • Respecting stops prevents small losses from becoming larger ones
• Emotional conditioning:
  • Mentions a 3-month trading plan to start small and reduce emotion-driven errors (fear of loss, urge to hold losers)
• Strategy adaptability:
  • If reversal fails, it may transition into a momentum trade
  • If price breaks moving-average support, it can trend down for the rest of the day

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Performance metrics / risk-reward framing

• References aiming for strong profit-loss ratios
• Mentions “6 to 1” and “2-to-1” style outcomes in different illustrations
• ABY example described as aiming for about ~1 point, using stop-based risk capping

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Disclosures / disclaimers

• The excerpt does not include an explicit “not financial advice” statement.
• It does include promotional details for joining a live chat/webinar:
  • Chat room runs Mon–Fri
  • Roughly 8:30–9:00 a.m. until close (as stated)

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Presenters / sources

• Ross Cameron (Warrior Trading) — primary presenter and source of the strategy and live example
• Warrior Trading — platform/community referenced
• Trade Ideas — referenced as powering/related to the scanners