Box Checker Stocks: The Day Trading Criteria Tim Bohen Uses Before Every Trade

Summary

In this video, the host discusses the concept of 'box checkers'—stocks that meet multiple criteria before making a trade. Key factors include identifying a catalyst (e.g., news, contracts, or partnerships), float rotation, unusual volume, and a clean daily chart. The focus is on selecting high-probability plays, avoiding impulsive trades, and targeting stocks with a proven history of sustained movements. The presenter emphasizes the importance of thorough research and preparation, offering strategies for day trading, particularly in the morning, to maximize gains while minimizing risk.

Takeaways

• 😀 A 'box checker' is a stock that meets multiple criteria, making it more likely to be a profitable trade.
• 😀 Impulsivity is a major pitfall for new traders; checking multiple boxes before a trade helps avoid emotional decisions.
• 😀 Focus on stocks with a **catalyst** for movement, such as real news, partnerships, or investment (e.g., PIPEs).
• 😀 Avoid trading on just news or volume alone. A good setup requires both solid news and high volume.
• 😀 Volume should be at least equal to the stock's **float** (number of shares) before considering a trade, with **2x float rotation** being ideal.
• 😀 Look for **unusual volume**, with at least **5-10 times** the 60-day average volume to ensure sustained interest in the stock.
• 😀 A **clean daily chart** is key—look for stocks that have consistent, steady moves with small wicks, indicating strong momentum.
• 😀 **Low float stocks** (under 10 million shares) are highly volatile and can make large percentage moves, ideal for day trading.
• 😀 Stocks priced between **$1 and $10** are favored because they allow for larger trades with bigger percentage gains.
• 😀 It’s important to trade based on **historical patterns**—stocks with multi-day moves are more likely to repeat similar price action in the future.
• 😀 While trading is not gambling, think of it like poker—only bet when the odds are in your favor with a solid setup and proper criteria.

Q & A

What is a 'box checker' in trading?

A 'box checker' refers to a stock that meets multiple criteria which suggest it has the potential to make significant price moves. The more boxes it checks, the higher the likelihood of a profitable trade, but there are no guarantees in trading.

Why is being impulsive harmful to new traders?

New traders often struggle with impulsive trading because it leads them to chase stocks without analyzing the right criteria. This can result in poor decisions, such as buying into stocks that eventually stagnate or collapse, leading to losses.

What role does a 'catalyst' play in identifying good trades?

A catalyst is a reason for a stock’s movement, like news or an event that can drive the price up. This could be anything from a major contract announcement to a private investment in a public equity (PIPE). The key is to look for real, actionable catalysts that can sustain movement.

How does 'float rotation' impact a stock’s potential?

Float rotation refers to the number of shares being traded relative to the stock’s total float (the number of shares available for trading). A stock needs to trade at least its float once a day to demonstrate market interest. Ideally, you want to see at least 2x float rotation for a better chance of sustained price movement.

What is the significance of unusual volume in day trading?

Unusual volume indicates a stock is attracting more interest than usual. If a stock trades 5 to 10 times its 60-day average volume, it suggests there’s increased market activity, which could lead to significant price moves. This is a key factor to watch for identifying profitable trades.

How do you determine if a stock has a 'clean daily chart'?

A clean daily chart is characterized by strong price action with minimal pullbacks. Ideally, the stock opens low and closes near the day’s high, creating a solid green candlestick with a small wick. This kind of chart suggests the stock has potential for continuation and avoids those with random spikes followed by quick drops.

Why do low float stocks have more potential for big moves?

Low float stocks (those with fewer shares available for trading) are more susceptible to rapid price movements. Because there are fewer shares in circulation, demand can drive the price up quickly, resulting in larger percentage gains, which makes them attractive for day trading.

What is the ideal price range for stocks you should focus on for day trading?

The ideal price range for day trading is typically between $1 and $10. These stocks are more accessible to a wider range of traders, allowing people to buy larger quantities of shares. Because of this, they have the potential for bigger percentage moves compared to higher-priced stocks.

How does a multi-day move differ from a one-and-done spike?

A multi-day move is when a stock continues to make steady gains over several days, with smaller candles on the subsequent days. In contrast, a one-and-done spike refers to a stock that shoots up quickly and then collapses, without any sustained upward momentum.

Why is it important to check SEC filings when evaluating a stock?

SEC filings are crucial because they provide verified, legally-vetted information about a company. These filings are official and must be accurate, offering reliable insight into a stock's potential. Checking SEC filings can help confirm that the company is legitimate and that there’s actual, verifiable news driving the stock.