Thanks to the legislative changes in various countries, the marijuana industry is growing by leaps and bounds that it has made approaches like “mail order marijuana” possible. As a result, trading in marijuana stocks has become a hot button topic worldwide.
Public acceptance has added fuel to the fire of cannabis legalization; the demand for cannabis products is soaring sky high in the global market. The marijuana industry is expected to grow by 10-20% and become more than 70 billion by the next decade.
Having said that, savvy traders are joining the bandwagon of cannabis trading while others are following the suit. So, are you too interested in grabbing a slice of the brownie?
Well, no worries. Here is a step-by-step guide to help you trade marijuana. But before diving straight into that, let’s understand the penny stock.
- What is a Marijuana Penny Stock?
- 7 Best Marijuana (Cannabis) Penny Stocks
- How Should I Invest In Marijuana Penny Stocks?
- Penny Stock Books to Consider Reading
What is a Marijuana Penny Stock?
What’s the buzz all about? Is the cannabis industry really going to surpass big giants and develop at breakneck speed? What about marijuana penny stock?
Well, a penny stock is a common stock valued at less than one dollar. Penny stocks land in the category of trade-to-trade. Companies inside and outside the pot industry are involved in the marijuana boom.
Due to the lack of liquidity and a lesser number of shareholders, many fear to invest in such penny stocks. However, that’s only half the truth – penny stocks actually have the potential to give high returns on investment.
For instance, if a person purchases 100,000 shares of a penny stock at a price of one dollar each, then a hike of one dollar will result in a $100,000 profit in a single day. However, the same is not the case with large stock because one would require a hefty amount of money to own a high volume of shares.
7 Best Marijuana (Cannabis) Penny Stocks
|General Cannabis Corp.||CANN|
|InMed Pharmaceuticals Inc.||IMLFF|
|CannTrust Holdings Inc.||TRST.TO|
The Flowr Corporation
|India Globalization Cap|
Is Venturing into Penny Stock Trading Worthwhile?
Just like any booming industry, there are various unscrupulous practices such as offshore rackets, no net sales fraud, guru fraud, reverse merger deception, short and distort fraud, and pump and dump schemes.
Maybe that sounds frightening, maddening, or confusing to those having no or less idea of trading. However, expert traders know that it is the golden time to yield maximum profits.
How Should I Invest In Marijuana Penny Stocks?
Now that you have got what the marijuana penny stocks are let’s specify the process of investing. Here are some factors that you must follow while investing in penny stocks:
Find a Broker
Well, you can’t just go and trade cannabis penny stocks on the street. There are many brokers offering penny stocks through stock exchanges. Most of the penny stocks typically trade on the over-the-counter (OTC) market. You can trade through Zacks Trade, which charges a low commission of 1% of the principle at the $3 minimum.
Perform a Research
Have an in-depth finding of the company you are considering to invest in. Check out the financial statements or SEC filings of the company. Check the online reputation of the firm and read the articles and news about the company. Search them on the platforms like Yahoo Finance and Benzinga, using Twitter, and have a crosscheck about their performance.
Another option is to trade the marijuana (cannabis) stock index which constitutes the largest cannabis companies. You can read this guide about how to trade the marijuana stock index for more information
Stay Within Your Budget
While making any investment, it is important that you stay within your budget no matter how compelling it sounds. You also have to think about losing the money other than getting the profits.
What if you would lose all the money, would you be okay with that? Consider both sides of the coin before spending blindly. Stocks are unpredictable; keep that in mind every time.
Determine the Buying and Selling Timeline
In stocks trading, it is essential to decide when you would buy or sell the shares. This can keep you from having extensive loss; keep an eye on the numbers, and you would be able to get an idea when it is the right time to sell.
At this stage, a strategy is needed; don’t let the greed come in, and if you think you can earn some profit, then do the sell than waiting and hoping for more rise. Use different kinds of selling methods that are known for being beneficial ones.
– Valuation level sell includes selling a share once it enters a certain a specific price range.
– Opportunity-cost selling means selling the share when the opportunity strikes, you know the right time by regularly monitoring the market’s behavior.
– The stop-loss selling strategy can be used when you notice the price of the share is dropped; you should sell the share at the time before it goes lower.
Buy the Stock
Now, it is time to buying the actual stock. Market Order and Limit Order are two types for buying the stocks. Market stock can be purchased at the market price, whereas the Limit stock can be bought at a lower/higher price. However, the price does not always fall, and you may not execute the order. Regardless, if it’s a long term position, the price won’t be as important as for a short term position. Remember, if you are day trading penny stocks, the minimal price valuation can be super important so even if you have to wait in line to get the best price, it’s worth it.
Make Yourself Aware
If you want to be in the game for longer, you need to learn a lot about stocks and the cannabis industry. The more you learn, the more knowledge and ideas you get. Hence, you become able to create more effective strategies with time, however; you should have enough time to invest in stocks.
Be up-to-date with real-time data, and monitor the activity of the market!
There are certain mistakes that a newbie investor makes while working with the penny stocks. It is wise to be aware of these mistakes and take care you do not get through them-
Invest In a Few
With penny stock, you are not going to establish an empire by investing in a bunch of stokes. Instead, learn the art of minimalism because that is what helps you in the long run. So, instead of investing in ten stocks, consider 2-3. It will also be a lot easier to monitor fewer stocks.
Inspect Your Stocks Regularly
Forgetting your investments often happens with novices where they just don’t remember things. To work with this aspect, you need to make sure that you are prepared to work with the stocks and have enough time. Perform buying and selling of the stocks at the right time and stay updated.
Tip: Don’t just believe any random advice on those finance forums; always believe your instincts.
Don’t opt for any stock having fewer shares or not at all. This affects the overall liquidity and raises the risk of losing your money. Instead, assess the stocks for the volume, and based on the monthly purchases, make your decision. Go with the stocks having a higher volume of trades.
Finish Your Business at the Right Time
Suppose if you have bought a share at 0.75 cents and now it is available at 0.50 cents, then instead of buying more of it, consider selling them. This would lead you to face the loss, but by buying more of it, you are just digging an even deeper hole for you. Always be practical and analyze the need of the time rather than being emotional and greedy. Do not forget that there is a high risk of penny stocks. Some of them actually went to default, meaning zero value.
Penny Stock Books to Consider Reading
Watching those YouTube videos seems to be a great way to learn the stock market. However, reading books that lets you know the fundamentals and advancements of the stock market is always an added help. Here are some books on penny stocks that you should consider reading-
Beginners who have a lack of knowledge or insights at all about the penny stocks, then this is the kind of book you should start with. It was first launched in 2013 and then in 2016 for the upgraded version.
The book advises on avoiding fraud, performing basic technical analysis, and reading the financial reports. Reading the book would let you trade in a different way than most individuals. While having a full-time job, you can easily use the tactics provided by the book and ensure yourself another source of income.
Jamil Ben Alluch is the author of the book, and it depicts everything about penny stocks or low-priced trading. Someone who wants to kickstart with a book can grab this one and become a better stock marketer than the average crowd.
For around $30, this book is worth buying in which the simple language makes the content easy-to-understand even for a beginner.
Day Trading For Dummies
The book by Ann C. Logue explains how a beginner should do the trading part. The book covers some useful insights about day trading that works for penny stocks. The book makes a novice prepare the strategy or come with an action plan far better than it would be without reading the book.
This is the book by Ian Wyatt that explains how to identify the businesses worth investing in. This way, the book would help you understand the businesses a bit more clearly. Of course, stock markets are risky, but by following the advice mentioned, you would be surer about your decision. Adding up this valuable source of information can be the best decision.
That’s the scoop on cannabis trading that interested ones can use mail order marijuana and play the stock market simultaneously. The Skyrocketing demand for cannabis is going to open a plethora of opportunities for those seeking a source of income. We hope you would make use of these tips, whether it is going to be your first share or the next one.
Also, even if it is a penny stock, don’t just invest blindly; determine the value of the share you are going to invest in.