Marijuana Penny Stock Trading brokers are now becoming cheaper thus making it easier for retail investors to invest their savings. It can be frustrating to find a good trading platform and depends on the type of stocks you plan to trade (whether pinks sheets or OTC), the amount of capital available to you, and how frequently you trade. Each week I receive dozens of emails inquiring about which brokerage to use but it is a challenging question to answer since it involves multiple factors.
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3 Important Things to Look Out For
Surcharges: Depending on your broker, most add surcharges to shares less than a dollar. TradeKing charges an additional 1 cent for every share below $2 meaning that if you buy 5,000 shares it will cost you an additional $50. If you don’t keep close watch on those small charges they can easily add up and eat into your potential profits. You should choose a brokerage with a flat commission rate or one that offers sizeable discounts on large orders. For instance eTrade, Charles Schwab, and TD Ameritrade all offer either flat fees or massive discounts and no hidden fees.
Stock Trading Restrictions: You should be capable of trading shares through an online platform and be wary of firms that force you to make your trades over the phone. Some brokers have restrictions in place especially with regards to issues such as short selling your penny stocks.
Volume Restrictions: The number of shares you are ideally allowed to trade is unlimited.
Different brokers have different account minimums, trade restrictions, commissions, and fees. Other important considerations include market maker routes, executions, software/trading platforms, and the quality of customer service. The greatest hindrance is not having sufficient starting capital and brokerages don’t like to deal with poor traders. If you live outside the U.S. in a country such as the U.K. or Australia, finding a penny stock friendly broker will be harder.
Marijuana Penny Stocks have had a negative reputation over the years and for good reason. The vast majority (90%) of those companies represent poor investments that are not something anyone would like to put in a 401k. Most of them are simply shell companies created with a sole purpose of ‘pump and dump’.
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Etrade is an obvious top choice overall since it charges a flat fee and offers outstanding trading software. Currently, Etrade has a promotion where traders with accounts of over $10,000 can trade free for the first 60 days.
The minimum deposit for a cash account is $500 and $2,000 for a margin account. Discounts are offered on large orders and penny stocks have no surcharges. Great research investment tools are available and the executions are very fast.
It is best suited for traders that trade frequently due to the tiered pricing structure, meaning that it is not recommended for non-active investors since they will have to pay additional commissions. The customer service is below average when compared to others while 24/7 phone and email support is available. The basics of the stock market are taught through video lessons.
The major limitation is that it does not accept traders from some countries. It is currently Tim Sykes favorite broker.
Interactive Brokers might have poor customer support but are still your best bet if you plan to short shares priced below $2. They have some of the best borrows for Cannabis Penny Stock Trading even though shares for shorting go fast.
Fees are levied for canceling or modifying an order and a monthly inactivity fee of $20 is charged. Unless you are a day trader, the commissions can be expensive. Interactive Brokers traders comprise mainly of massive institutions and high net worth individuals.
Unlike Etrade, Interactive Brokers accepts international traders and does not discriminate against particular countries.
This broker has been operating for more than 40 years. In 2009, Ameritrade took over Thinkorswim. The broker has a solid trading platform with helpful charting tools as well as tutorial options to help you get started. In spite of this, their trading platform has experienced minor technical errors in the past leaving those customers that were looking to exit trades quite angry.
TD Ameritrade has no inactivity or monthly fees making it perfect for long term investors. Trade execution is great and the borrows are decent if you would like to short penny stocks. The broker offers free paper trading demo, which is great for beginners looking to test strategies and get a feel of the market.
The main drawback of TD Ameritrade is the $9.99 fee, which is much higher than that charged by other brokers. It can be argued that by charging more than the competition they are able to offer better customer support or it could be that they are greedy like the rest of the players on Wall Street.
One of the best things about SureTrader is the chance to bypass the pattern day trader rule since it is located offshore in the Bahamas. The pattern day trader rule is a rule set by the SEC that does not permit traders with accounts below $25,000 from executing over 4 or 5 day trades over a 5-day business period. This can be quite annoying and makes it hard for traders to grow their accounts fast but still protects day traders from losing money.
Recently, SureTrader’s CEO, Guy Gentille was indicted by the SEC for manipulating penny stocks. It should be noted that while SureTrader was not involved in the schemes this scandal has tainted their reputation. Hearing such news about a company’s CEO would make any trader feel uneasy and for this reason, trading over $2,000 with them is not recommended.
The account minimum is $500 and the charges are $4.95 for every trade for up to 1,000 shares but an ECN fee of .003 is charged for routing. The leverage currently offered is 6-1 and future plans are to increase this to 20-1.
The information pertaining to this company available on Google is very limited and while the company was established in 2000, it does not even have a Wikipedia page.
ChoiceTrade is better suited to OTC stocks and only costs $7 for every OTC trade. The broker has a volume surcharge of 1 percent for any trade over 500,000 shares. There is no account minimum but an inactivity fee of $30 is charged for every quarter.
However, this is not how it works. Patience is needed and you should paper trade for not less than 3 months. Keep in mind that you need to learn before your earn. Once you are ready, it is advisable that you start trading with not less than $2,000. Interactive Brokers and Etrade are the top 2 online penny stock brokers with great reputations.
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Before I can tell you the advantages and disadvantages of trading futures, it's important to understand how it differs from trading stocks.
When you buy a stock, you own part of the company. That is, you share ownership with other investors. That's why we say you buy shares.
Trading futures, on the other hand, requires a contract to buy or sell the commodity in the future. That's why they are called futures.
You can buy or sell those futures contracts as easily as trading stocks. For that matter, you don't even have to lay out the money. However, you do tie up resources in the form of margin.
The problem is that the margin held is nowhere near the actual value of the commodity if you were to purchase it. This is known as the Notional Value. It's calculated as the market value multiplied by the leverage.
Okay, I just threw you two more terms that need definition:
The market value is the price that traders are willing to pay. In general, this is determined by supply and demand. The leverage is the number of units of the future index.
For example, the E-Mini SP& 500 Futures has a leverage of 50. As of this writing it's trading near a market value of 2100. Multiply that by the leverage (50) and you get $105,000. That's the Notional Value of the E-Mini S&P.
As you can see, if you buy one E-Mini S&P contract, you are controlling $105,000 in value. However, unlike stocks, you don't own it. You just have a contract to buy or sell it, depending if you went long or short.
Low Margin Required
What did you actually pay? That's known as the margin that the broker requires you to hold while that trade is active. It varies, but it's around $5,000.
If you bought a stock valued at $105,000 you'd have to pay $105,000. If you used margin, it would still require a payment of half of that. The advantage with futures is that you only tie up a small fraction.
However, the disadvantage is that you need to know what you're doing. If you let a Futures trade get away from you, you are liable for a huge investment. Remember, it's a contract.
That's why traders buy and sell Futures contracts without actually ever buying the commodity.
What's the disadvantage?
When trading futures you have to apply your due diligence in knowing the notional value of the future contract.
If you don't pay attention to the Notional Value, and a trade keeps going against you and you don't close the trade at a small loss, it can get out of hand.
You could end up losing a lot of money in a short time. If you reach the limits of your margin, your broker will close the trade if you don't. That means you've been taken out of the market and you may not have the resources to get back in. Game over!
For this reason, you need to stay small. Don't add to bad trades hoping to lower your cost bases. Rather, just admit that you were wrong and you'll be around to play another day when an opportunity arises.
There are many, and these are the reasons why I love futures over stocks. The rest of this article will briefly list the advantages with trading futures.
Trading Long and Short
Going short with Futures is just as easy as going long. It's just a matter of deciding in which direction you think the market is headed.
No Day Trading Limits
There is no day trading limit with Futures. Stocks can only be traded three times in a day before the IRS considers you a day trader. Futures can be bought and sold any number of times in a day, allowing one to take quick profits and benefit from intraday swings.
No Wash Sales Penalties
The IRS does not penalize you for taking a loss and reentering the same trade within 30 days. When this is done with stocks it is considered a wash sale and you lose the benefit of deducting the loss unless you can carry it forward to a future gain on the same stock.
The reason why it's not penalized for Futures is because Futures pricing are recorded as Marked to Market. I won't get into that here. You can always do a Google search for the term if interested.
Trading 24 hours
Futures trade nearly around the clock, except on weekends and short periods in between for exchange record keeping.
European Style Trading
Stock Options follow the American Style that can be exercised anytime. When trading stock options, one needs to be careful to avoid being exercised if the option is in the money.
Most Futures Options trade European Style, which can't be exercised before expiration. There are some exceptions, especially with weeklies. That's beyond the scope of this article though.
Futures and Options on Futures are treated according to IRS Section 1256. That provides a tax advantage since 60% of all gains are considered Long Term. This is true even if held for just a few seconds.
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9 Marijuana Penny Stocks to Watch in 2017
If you're looking for the best pot penny stocks, you'll love this list. Effective November of 2016 these stocks became very volatile as there were many voting to legalize marijuana in certain states including Nevada, California, Arizona, Florida, Maine, Arkansas, North Dakota, Montana, and Massachusetts.
While many of the companies in the marijuana sector have doubled and tripled in their pricing, there are also many that wound up to be financial train wrecks that were destined to a long term failure. Many people that are new in trading are spending upward of $500 only to find that they have made a terrible investment.
Struggling to survive and crippled in debt, they have little revenue in which to support the operation. From defunct mining companies that chose to add the word "cannabis" to the name in order to cash in on such a craze, many haven't learned that this isn't going to change things. The end result is the same, if you put the stocks in the same lot, they're still going to fail and someone is going to get caught holding the "hot potato". Once legislation passes, share prices begin to sharply drop.
1. Cara Therapeutics Inc. (NASDAQ: CARA)
In 2004 this company was founded in Shelton Connecticut. At its clinical stage, the biopharmaceutical company has developed many products that target the peripheral nervous system. I.V. CR845, the lead product for Cara, is in Phase III clinical trials. These are designed to treat postoperative pain in adults. This pain is in the acute pain stage. The company is also working in the development of lead molecules that are to selectively modulate the peripheral CB receptors while not targeting the CNS cannabinoid receptors. The most advanced form of the CB compound is the CR701. This is the current stage of preclinical development for the treatment of neuropathic as well as inflammatory pain.
The largest benefit of this is the development of the marijuana based analgesics as they work toward the CB2 receptors. The analysts are overly confident that in spite of the fact that the stocks have dropped, they will make a strong comeback. They began with a target price of $20.33 and the current price is $5.97.
2. Aurora Cannabis In Com NPV (OTCMKTS: ACBFF)
Based in Vancouver, this company is engaged in both cultivations as well as harvesting and the selling medical marijuana in the country of Canada. Using water from Canadian Rocky Mountains it brings the cannabis plants to harvest in a 55,200-foot facility.
Offering high-quality medical cannabis the company is pricing the products at $8 per gram strain and at $5 per gram composite for patients. It boasts free shipping anywhere in Canada and the stock has grown over 90 percent since the start of the year.
3. The canopy of Growth Corp. Com NPV (OTCMKTS: TWMJF)
The Canopy of Growth and Corporation, formerly called Tweed Marijuana Inc., is by and far a large producer of all medical cannabis in the country of Canada that is marketed under the Tweed and the Bedrocan brands. With over half-a-million square feet of greenhouses indoors, this company acquired Bedrocan Cannabis Corporation in 2015 for about $58 million. As of current, the price grew 37.81 percent.
4. Zynerba Pharmaceuticals Inc (NASDAQ: ZYNE)
This pharmaceutical company was founded in 2007 and focuses on the development and commercializing synthetic cannabinoid therapeutics that are created and developed for transdermal delivery. Two of the candidates are the ZYN002 AND THE ZYN001 forms. ZYN002 is a synthetic cannabidiol (CBD). The permeation enhanced gel for the transdermal delivery has designed the product to be delivered with only once or twice per day dosing.
The ZYN001 form enables the transdermal delivery via a patch. It is used on the arm, the back or the thigh. It's being studied for treating conditions like fibromyalgia and peripheral neuropathy. Stock pricing has moderately grown this year and it's risen 6.45 percent as of date. Current' price is $10.23 and the target price is $30.25.
5. American Cannabis Company Inc (OTCMKTS: AMMJ)
Incorporated in 2001, this company offers solutions for cannabis businesses in both the United States and Canada. There are two main components of the company operations: The advisory and consulting component and the sale of the products and the equipment for the clients in the cannabis industry.
Offering consulting services such as commercial cannabis business planning services and the license applications as well as the cultivation and the building of the consulting. This includes cannabis regulatory compliance and compliance audits as well as the business growth strategies and monitoring services. Additionally, the company offers up products and equipment like Satchel, SoHum, and Living Soil as well as High-Density, Racking System and lastly, The Cultivation Cube.
6. Cannabis Sativa Inc (OTCMKTS: CBDS)
Based out of Nevada, and in operation for around 12 years, this company just recently went public. Engaged in the development and the promotional work of natural cannabis products, they have both licenses for medical strains of cannabis like NZT and a lozenge that delivers the cannabis as well as a trauma cream.
7. Medical Marijuana Inc (OTCMKTS: MJNA)
Still in the development stage, yet incorporated in 2005, this company has a wide range of services, products, and technology. All of this is geared toward the medical marijuana and the industrial hemp sectors. It includes all cannabinoid based products as well as cannabis chewing gum and new and innovative extraction technologies as well as isolated high-value extracts that are designed, created and developed for pharmaceutical as well as cosmetics and nutritional industry.
8. Canna Securities
Regardless of whether you're buying Canna Securities or stock will be dependent on the prospects of the cannabis business. Canna Securities (NASDAQ: CSAX) has stood out clearly as a stock of marijuana that appears to have no solid prospects. With their focus no directly on the marijuana itself, it's a sure win.
CSA or Canna Security American was created in the year 2009 in order to meet the growing needs of the evolving medical industry from a legal standpoint of compliance. It offers a security aspect. CSA is instrumental in development of the legal cannabis market in Colorado. They worked on the committee for rulemaking and with the Department of Revenue and they helped formulate the regulations in the state of Colorado.
At present, CSA is considered and recognized as a leader in the security and the compliance for the legalization of the cannabis industry. They offer high-quality and dependable solutions which are easily adaptable to meet the ever changing needs and security of the industry. This delivers sustainable growth as they help entrepreneurs to grow and be successful in the new and dynamic market.
From the inception, they've specialized in the engineering of the custom security and to ensure that they are in full compliance with all of the federal and state regulations as well as the local laws. They offer security solutions to all of the cannabis businesses including armed, unarmed guards as well as armored transport. This also includes alarms, door access systems, and video surveillance. It includes security systems and all state licensing consulting.
This extensive list includes armored transport as well as guards that are armed and unarmed. Comprehensive background checks and all site risk assessments. Guards for CSA will dress professionally with appropriate identification and they will all have a military or law enforcement background. With a new fleet of Mercedes-Bens Sprinter vehicles, they are armored with the latest in bullet-resistant technology and all of them are GPS tracked and equipped with 4 point camera systems which offer live transmission at all times as well as streaming footage to the command center.
In this fashion, they can offer traceability for all pickup to drop off locations. They can also offer comprehensive security solutions to the industry for cannabis that is unparalleled.
With services to over 130 clients in over 500 facilities in 14 states where marijuana states CSA is now achieving a 100 percent approval in licensing and rating as well as their consultants. As regulations change they are able to adjust quickly and effectively as more states implement and regulate the dispensary models. They are able to leverage their expertise in compliance with the various security codes and standards as well as the guidelines to offer clients the most innovative and cost-effective security.
As the national leading security firm, they know what the risks are and what to anticipate. They can tailor their services to ensure that there is maximum loss prevention and everything is in legal compliance. We've positioned ourselves in the market as a brand name leader in cannabis security industry.
Nutrafuels (NASDAQ:NTFU). NutraFuels is a United States manufacturer that is located out of Coconut Creek in Florida. With a facility that has been inspected and it's also been approved by the department of agriculture in Florida, they are FDA registered and they have a 3rd Party cGMP certification. All of the staff are trained and certified in the cGMP requirements.
NutraFuels are all manufactured with the highest quality standards and all of the industry protocols. Their portfolio of companies includes none other than industry CBD Leader Hemp Genix and the Skin Care Manufacturer leaders NF skin. They also include Oral Pro Nutra Spray and Nutra Pro Shot as well as many others. Nutra Fuels has led the industry in the manufacturer of CBD oral sprays and other liquid CBD products.