Tim Bohen, an entrepeneur, day trader and the lead trainer at StocksToTrade, spoke with Benzinga about what it takes to achieve consistent profits in the stock market.
'It Was Like The Lights Came On'
Bohen’s interest in trading started at a young age, he said.
“I have this memory of the fourth grade, waiting for my dad to bring home the newspaper so I could look at the stock prices," Bohen said.
“For whatever reason, I had the bug. It was in me.”
His entry into business came via an internet technology startup from 1996 through the early 2000s.
Bohen and a friend were working 18-hour days at the startup.
After the business matured, Bohen said he acquired enough capital and time to begin trading on the side. He traded stocks with fundamentals he believed in, and experienced mixed success.
“I’m a huge reader. So, I’m reading every book I can on trading. [In 2007], Tim Sykes’ "An American Hedge Fund" gets published. I read that and I’m like, ‘whoa.’ I didn’t know that $2 stocks existed.”
Bohen realized he could speculate on low-priced stocks with an upward or downward bias.
“It was like the lights came on. I started in 2007-2008, which I call the glory days of shorting these low-priced stocks because anything that spiked slammed back down."
After becoming consistently profitable, Bohen said he turned his side hustle into a full-time venture.
Low-Cost Stocks No Longer A Niche
A decade ago, actionable information was harder to come by, Bohen said.
After learning important principles and techniques, Bohen said he became consistently profitable shorting junk stocks.
Things have changed, he told Benzinga. The space is crowded, causing short sellers to be liquidated out of positions due to margin expansion.
“Everybody wants to short these low price stocks. That’s why we see them go 600% in a day. Back then, it was this little unknown niche nobody knew about.”
The Biggest Problem: No Plan
Traders try too many things, Bohen said.
“They buy. They short. They trade ETFs, Bitcoin, forex."
His recommendation: pick a niche, journal trades and find setups that make sense.
“One of my favorite quotes is the Confucious quote: "the man who chases two rabbits, catches neither.'"
At the outset, traders should risk minimal capital, conduct periodic reviews and track performance statistics, he said.
“I’ve seen people think, ‘oh, my niche is going long,’ then you look at their stats and they’re better short,” he said.
A statistics-based plan alleviates clouded judgement, Bohen said. Once traders have tracked their performance and identified a particular niche, such as shorting volatile low-priced stocks, they need to plan in accordance with parameters that agree with their long-term goals and risk management.
A common strategy is to take advantage of volatility, he said.
An example: trading multiday, big-percentage gainers with a plan that addresses key levels of resistance and support and sizes into positions as both price action and volume confirm an initial thesis.
Another key to Bohen’s success is trading a maximum of two stocks at any one time, he said. This allows him not only to mitigate stress, but to get comfortable with company fundamentals and filings.
“If I can be 90 years old, trading my own money, teaching others this niche, public speaking and making an impact on somebody, that’s my passion.”
Trading, Bohen said, "is the ultimate side hustle, in the kind of Gary Vaynerchuk way— you can always trade on the side. The beauty of this, if there are no opportunities, you close your platform and [step away].”
Tim Bohen took part in the Traders4ACause conference Oct. 11-13 in Las Vegas.
Photo courtesy of Tim Bohen.
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