How to Trade Marijuana Stocks

Ah yes, you see the movement of legalizing marijuana in different nations and want to get onboard some cannabis related stocks. Well, with this new legalization comes tons of new stocks in this industry.

The easy part is finding the list of them, the hard part is which ones should you trade. I must point out that this is for entertainment purposes only and you should never ever trade off advice you'd receive here. Just take it as a simple how to guide and do your own due diligence on any company you want to trade or invest in.

I am not an analyst and am not responsible for any of your trades or investments, profitable or a loss.

If you want to look at stocks to buy in this industry, go to seeking alphas article on their recommendations.

Now that I've got the disclaimer out of the way, Legalizing this industry certainly creates opportunities but it also can create new pitfalls if you don't know what you are doing.

A look at the North American Marijuana index shows a steady ramp up from October to January.

trading marijuana stocks

Canada Legalizing Marijuana ?

It is expected that Canada will pass a bill to legalize marijuana this summer (2018). As with hype, it usually under delivers so be prepared for all possibilities.

As long as you manage your risk and do your own due diligence, anything is possible. Even the rally from Oct- Jan could be the market pricing in the expected news that Canada will pass and if/when the actually passing occurs in the summer, it may actually be quite steady with little volatility.

It has all the feelings of the saying on Wall Street:

 

Buy the rumor, sell the news 

 

Looking at the Oct rally above, the rumors were that Canada would pass law to legalize marijuana and hence the rally. I'm not an analyst, I trade pure technicals with a fundamental checklist of the stocks I'm watching (CANSLIM)

This is the great world of speculating. We never know exactly what is going to happen. We just try position ourselves for opportunities and manage our risk.

But with the increased awareness in this industry will most certainly come new opportunities. The tough part is finding those hidden gems in an ocean of garbage. Most of these stocks will fail but great money could be made if you can find a golden nugget.

I've been doing some digging to try help myself position in this industry. I've never traded these stocks before so I'd prefer to find someone with experience to help me where at all possible.

 

Finding A Marijuana Stock Trading Mentor 

I am a newbie in this particular industry like a lot of you reading this so I prefer to find someone good at what they do and look for ways to emulate them. I will study what this website has to offer and see what I can learn.

You can read an article by Adam in forbes to get an idea of what he is all about. He also has a cool blog dedicated to the marijuana industry and stocks he watches and researches.

You may also find his website useful for you. He has two products available. Both I have found useful so far but as I spend more time looking through his site, I will be able to update accordingly.

 

How can I trade cannabis stocks ?

Most online brokers have access to these stocks for you to trade. It is as simple as setting up and funding an account with them.

Here is a list of brokers available. Be sure to check with them when you are signing up as some may change their policies on allowing traders trade these stocks.

  1. eTrade
  2. Interactive Broker
  3. TradeZero
  4. Suretrader
  5. Centerpoint Securites
  6. Robinhood
  7. Fidelity Investments

 

 

Am I changing my own trading strategy ?

Absolutely not. I am just looking to expand and I am not diving head first with all my money into it. Baby steps as they say. My bread and butter trading is still and will always be CANSLIM strategy similar to the likes of Mark Minervini or Dan Zanger (the only difference is I don't have as much money as them yet) lol

I always preach sticking to a niche and getting better at it. This is my attempt at branching out and with any new trading venture, I will start tiny until I can see some sort of trading consistency and go from there. If I fail investing in these stocks, no harm as I'll manage my risk appropriately and write up lessons I will have learned.

 

An interesting way to profit from the legalization

I recently came across a book all about helping people start their own marijuana business. You can get it here. Obviously, this is only applicable to people where it is legal to sell it.

The book delves into ways to set up and operate a business in this industry. Maybe some of my readers will be future cannabis billionaires from setting a business like this up. If you are, feel free to send money my way or some of your supplies :)

As with any new industry, it will be full of new policies over time. Just look at the alcohol and tobacco industries. If the Cannabis trend really catches on and grows globally, you can be sure governments around the world will look to tax and impose stringent rules on distributors.

 

A Synopsis of Where To Start

  1. Create a trading plan - You can learn how to do this in my post here.
  2. Set up a broker - Find the ideal broker for you and fund an account. You can pick one from the list above or choose your own preference.
  3. Find a mentor- It can be any mentor, you can use the one I mentioned above or find your own one to help guide you on the right path.
  4. Find a stock to trade/invest - If you have a good mentor, finding these stocks shouldn't be as hard as you will be armed with the right education to do the appropriate research.
  5. Track your results - Study your performance from investing/trading these stocks and look for areas of weakness and improvements you can make.
  6. Mistakes - Make sure you don't make any of these trading mistakes when you start or your account balance will suffer.

 

Close

Two Step

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.