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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By all accounts, the nation's economy hasn't been this bad since the Great Depression in the late 1920s and early 1930s. The stock market has been like the Tower of Terror at Disney World, plummeting nearly 800 points in a heartbeat, some prominent companies are looking to the federal government for a very large life jacket, others are being snapped up by the competition at relatively bargain rates, credit availability is tightening, and everybody is wondering how it will affect them.
Call us crazy, but the volatile stock market fluctuations, the extreme turbulence, and people's growing unrest (to put it mildly!) are actually good for all. Many times, we only embrace elemental change when we are highly motivated or in great discomfort. We think we can all agree that we are all feeling pretty uncomfortable right now. Which makes it an ideal time to look beneath the surface, identify the real issues, and devise solutions.
Times like what we're in pull back the curtain on a structure's flaws - much like Dorothy did in the Wizard of Oz - and force us to take a deeper look at the problems. Our fear is literally exposed, driving us to search for its root. Quick fixes and band-aids that only address surface problems - like the $700 billion federal government bailout that was recently passed - might provide some temporary relief but are nowhere near a long-term answer.
What's compounding the situation for Americans and for an increasing number of people around the globe is that there is no quick fix. A lot of this stems from the McDonald's mentality that many of us have. We're hungry, so we drive to a fast food joint, order our meal through the drive-up, pay for it at the first window, pick it up at the next window, and then scarf down the fatty, salty, somewhat empty calories as quickly as we can.
An occasional quick trip to the drive through is a nice break from one's cooking chores and it's certainly convenient but it wouldn't be a good idea to make greasy spoons your daily destination to fuel your body. Ever see filmmaker Morgan Spurlock in 2004's controversial Super Size Me?
Well, we and our national economy are at about the same point Spurlock was after eating three squares a day at McDonald's for 30 consecutive days without working out - inflated, busting out of our collective pants, hypertensive, and an internal mess.
After years of hedge fund, money market, and portfolio managers driving the economy and artificially boosting a lot of companies' stocks - and thereby rocketing some CEOs' compensation into the stratosphere - out of greed and a desire to rake in monstrous performance commissions, we find that this economic model is finally starting to collapse under its own bulbous weight.
One of the stanchions that has supported this top-heavy financial picture has been consumer confidence. Americans gladly went along with the market fluctuations and willingly paid their brokers the inflated prices on their stock tips. Overall the underlying financials of most investments were strong, but then Americans began to read and believe the media reports that the economy was beginning to go in the tank even before the onset of the sub-prime mortgage crisis.
Media repetition does work and as the elements of a perfect financial storm coalesced with the near demise of AIG, the Lehman bankruptcy, and the Fannie Mae and Freddie Mac bailouts, the confidence of Americans soured into disbelief and then borderline paranoia. This is where we pick up the story.
The $700 billion question now is "How can we pull ourselves out of the seeming doom and gloom to fix the inner workings of the American economic engine?" The answer is by fixing what's on the inside of each us first! You heard us right!
Let us explain ... You see, what's on the outside is merely an outpicturing of what's on the inside. And a big component of that is our values.
Two of our predominant economic values have been instant gratification and greed. Americans have become spoiled and that has been no more evident than in the amount of stuff we buy. Window shopping trips turn into buying orgies of things that we think might be nice to have but don't really need. We are compelled to keep up with the Joneses by having matching luxury SUVs, the latest electronic gadgets, or having our homes decorated just so to impress whoever it is we expect to visit. One of our family friends frequently takes walks in her South Carolina neighborhood the night before the recycle trucks make their early morning rounds and she commented how amazed she is with the empty boxes of stuff she sees in the trash bins every week. Whether or not we can afford the shopping bags full of products that we cram into our new vehicles is merely a passing consideration for many. We want what we want and we want it NOW!
Unfortunately, cash isn't usually the currency of choice. Rather, it is the readily available and easily obtainable temptress, credit. Don't have the cash for that new coat you want today? Not to worry, just charge it! Credit cards maxed out and looking for another card to leverage your spending habits? Just wait until the mail comes tomorrow and brings another four or five credit card offers that lure us with instant approval and low rates, among other perks.
If you can budget your finances, adhere to that budget, arrange to pay off your credit card balances in full when they are due, and take other fiscally responsible steps, credit is a great thing. However, if you're struggling to make the minimum payments and racking up interest charges each month, not so much. As time has passed, more Americans have fallen into the latter category than the former.
Like a drug addict who quickly moves from marijuana and Ecstasy to cocaine and then heroin in search of a bigger high, Americans have fueled their credit habit by avariciously turning their gaze onto their homes. Transforming their residences into their personal ATMs, Americans siphoned equity from their homes at an annual rate of $700 billion (number sound familiar?) during the third quarter last year, according to a February 11, 2008 Business Week cover story.
The viability of home equity loans has nosedived as have housing prices. Some experts see the potential for an unprecedented 25%-30% drop in housing prices over the next two years, which could put a $5 trillion-sized dent into household wealth; would mean that two out of every three people who bought in the past year would owe more than their homes would be worth, preventing them from taking cash out even if they wanted to; and would drastically reduce the number of carpenters, real estate agents, mortgage brokers, and furniture salespeople.
Lenders, who boosted the housing boom by significantly relaxing their standards, are now contributing to the crisis by once again requiring down payments and abolishing no income verification mortgages. Their greed in chasing the almighty dollar a few years ago has now resulted in the virtual shutting down of the sub-prime mortgage business, a scarcity of home equity loans and credit lines, and jumbo loans that are commanding premium rates.
Taking a hit from the housing crisis is the automobile industry, which is a major force in the American economy and has many different businesses supporting it through parts and materials. Lenders are pulling back as borrowers are falling behind on their car payments at higher levels than in past downturns. J. D. Power has projected approximately 14.95 million vehicles being sold in 2008, down from 16.2 million last year, the lowest level since 1995. This is serious, indeed, since the automobile is considered to be a person's 2nd largest purchase, behind a home.
As the American economy (one could argue its way of life) sways back and forth on top of its tremulous foundation like a drunken sailor out to sea, it should be a wake up call to all of us. It should propel us to look in the mirror to figure out what we need to address inside ourselves to make us feel better.
Two areas that warrant scrutiny are choice and personal responsibility. While many are still prone to point fingers, those who are moving on realize the role they've played in events and that there are changes they need to make to ensure that the events aren't repeated. They also know that we have choices to make every moment and that what we choose to think or do this moment is intricately intertwined with what transpires in the next. Those who choose to embrace their personal power choose to be victors, those who don't are victims. Which are you?
Another obvious issue that merits examination has to do with lack. Many people try to compensate for a lack of confidence on the inside by accumulating stuff on the outside. They try to use clothes, jewelry, jobs, automobiles, and homes as shields so those around them aren't able to see a perceived lack of mastery or even competence in one area or another. These individuals think that securing a corner office, belonging to an exclusive country club, or living in a tony neighborhood will enable them to feel better about themselves.
Just like the multi-billion dollar federal bailout, these baubles are merely band-aids that deflect attention away from where it needs to be focused. Trust us, we tried the cosmetic approach and it does not work. We had the grand 10,000-square foot home in bucolic Cambridge, living down the street from a former Dynasty TV star; drove an ethereal BMW 7-series; and Don had a prestigious Vice President of Sales and Marketing job for a small business membership organization. But we hadn't done the work on ourselves so our lives unraveled like the Mets in a September pennant race. We couldn't sustain the house, which was evolving into a money pit; we were unable to afford the car; and the job was a terrible fit.
It's when we fix what's truly broken that life's miracles begin to unfold for us. As we feel better about whom we really are, our relationships start to excel, we become aware of career opportunities that will enable us to do that which we love, we finally can appreciate all the gifts in our life that we previously overlooked, and, amazingly, financial prosperity flows to us as we become less and less concerned with it. Our preoccupation with lack transforms into joyful acceptance of abundance.
And something else happens when we're in alignment and not stifled by fear - we allow our creative juices to flow effortlessly throughout all areas of our being. While fear constricts our innate creative nature, the lack of it encourages us to think of new and exciting ways to enhance our relationships, make our mark at our job, have fun, thrive and not just survive somewhat challenging times, and, best of all, be good to ourselves. We're also able to manifest that which we want in life quicker and more easily!
Within short order, it becomes a wonderful chain reaction. Since what we are is what we think, the world around us starts to undergo a startling metamorphosis. Our newly emerging thoughts about ourselves change our beliefs and as our inner world shifts, so does our outer world. As we become more in tune with who we are, we begin to act differently and those around us respond to us differently. As the negative thoughts are washed away, they are replaced by uplifting thoughts and feelings that generate more of the same. They can't help it, that's the law! That is, it's the Law of Attraction, which states, in essence, that likes attracts like.
A perfect example is getting up in the morning and stubbing your toe, popping a button on your blouse, realizing your favorite slacks don't fit, or getting cut off in traffic. A lot of us stay upset at those events and our day goes downhill from there, spiraling into nonstop annoyances, inconveniences, and slights. However, if we took the time to let the events go and recalibrate our thinking to a positive frequency, there's no place to go but up! Remember, thoughts do become things!
Also keep in mind that thoughts take time to take form. Patience is a virtue, and it also seems to be a foreign concept to many of us walking the malls and surfing the Web. As we mentioned earlier, it's this need for instant gratification that helped put our country into the delicate economic condition that it finds itself. Professional sports teams have also tried the fast track by signing high-priced free agents (see New York Yankees) or trading for high profile players (ditto) to capture championships, only to come up short. One of the rare exceptions was the 2007-08 NBA champion Boston Celtics.
Rather, life is a process and persistence is an essential ingredient. We didn't suddenly wake up and find ourselves in this financial quagmire overnight and we're not going to miraculously rise and shine tomorrow morning to gum drops and lollipops. It's going to take time for our country to find the fundamental flaws that plague its economic system and it's going to require our collective consciousness to pull it up by its bootstraps.
That's why, we think, consumer confidence is in the sewer drain, our collective fear is palpable, and the stock market is performing like a possessed yoyo, finishing up 900 points one day and down 700 points a couple of days later. There's no quick fix this time and no one seems quite sure about what precisely to do to keep the ship from sinking. This time, we can't just pop a frozen meal into the microwave and expect it to be done in three minutes.
Unless we become more reflective and introspective and fully realize what's truly important in our lives, it won't matter what is done to fix the American economy because it won't last and we'll find ourselves in a similar, if not worse, predicament. The signs are clear and they are calling for an in-depth re-evaluation of that which guides us.
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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.