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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You can't just jump into the deep, vast ocean if you don't know how to swim. That is the best analogy for somebody who is too eager to dive into forex trading without much know-how about the business yet. Forex education is necessary for those who want to enter the forex trading scene and succeed.
The appeal of the forex trading business is that it is highly liquid. Its greatest advantage is the huge potential for profits. For people who want to earn big money and think that forex trading is an easy way - they have to think again. In order to become successful in this business, you need a solid forex education to back you up.
Reading a few websites about forex or watching the news as they deliver the forex-related information are not enough. You need to know the terminologies, the processes, the tools conditions and methodologies. Many of those who have been successful have spent a great deal of time studying the market over the years. They have undergone tutorial sessions on forex. They plan their investments based on trends they have established watching the market. The best traders have learned over time how to see disaster and how to respond accordingly. These learned investors know how to profit big time, and how to minimize losses.
Forex education is key in making the soundest of decisions when it comes to forex trading. The market is open 24 hours a day, 5 days a week so there really is a lot of room for making money and a bigger room for losing it - unless you're already a smart investor.
The first step is always to know about the ABCs and 123s. Forex education is the foundation for every transaction you will make. When you lose some, you gain some experience and additional knowledge. Stock this information for future reference, so you would know better next time the same blow comes your way.
Most sessions involved in forex education are programmed to provide beginners and even the more experienced ones with all the tools necessary in buying and selling currencies. Charts, trending, analysis, and interpretation of data are also critical in making it through a forex market day.
Aside from the training sessions, you have to continuously update yourself by digging deeper into what you hear from the news, and what you read from the papers and books about forex. If you read up you will understand what's happening and what the factors that affect the prices are. Economic issues are the main catalysts in forex trading but there are other issues like political events, countrywide sentiments, new laws, natural disasters, and cyclical process in the finance market that affect a countries currency.
A person with a firm foundation on forex education is the likely candidate to reap substantial benefits. But, aside from his intellectual and logical take on things, he should also be emotionally balanced in all his forex investments. He should be able to use his forex education while checking and balancing it with his emotions. A good combination will certainly make one very successful and rich forex investor.
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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.