When you become a day trader, you are going against the grain. You are picking a way of life and a method for making money that corporate stuffed suits look down on and traditional investors look at as a Wild West offshoot of real financial work. The parallels with the marijuana stocks are striking. There is no other growing sector that is more opposed to traditional business. The numbers are huge and the appeal to counterculture agitators is there. That is why there is such an opportunity to profit off marijuana stocks as a day trader.
Day trading is all about taking advantage of volatility. You need violent fluctuations in share prices in order for day trading to be profitable. When stocks go up 30 or 40 percent during a day, that means that there is opportunity to buy low and sell high. With all that volatility, you will run into some risk, but the key is to manage that risk accordingly.
While trading in marijuana stocks of companies that are actually selling the product in states with legal recreation statutes can be risky, because of the chance of random federal enforcement, it stands to reason that you can make better decisions by investing in biotech stocks of companies that work in the medical marijuana field. They are generally safer marijuana stocks to put your money into. The medicinal market is much more regulated and likely to grow steadily over the next few years.
Of course, though, if you are day trading you are going to want to go with the sector that has less steady growth. You can apply strategies like gap & go trading to these stocks. Finding a gapper or a stock whose share price has risen over the closing price the day before in the morning is a great sign. You need to confirm other factors, such as the overall float or number of shares available for trading and a breaking news catalyst for the pre-market rise in price, but once you find that you are off to the races. Gappers that are up 4% over the day before a likely to shoot off on a run that will move your profits upwards.
For slightly longer term trading strategies, it makes sense to check out companies like the Green Organic Dutchman, a Canadian company that is aiming to be one of the largest producers of organic cannabis in the world. The IPO is on the near horizon, but finding out about companies like these early on can make your ability to profit off of marijuana stocks that much easier. Canada is ahead of the United States in the legalized production and sale of weed, so marijuana stocks from Canadian companies are more likely to be long-term winners than U.S. companies.
No matter if you are day trading or looking at some longer plays, you want to educate yourself as much as possible about investing before you risk your money. When you link up with a day trading education site, you can start by paper trading, or trading with virtual currency in a simulated brokerage account. That kind of practice can have long term positive effects on your bottom line.