It’s important to educate yourself before you jump into any type of investment or investment strategy. This beginner’s guide to marijuana stocks will give you a starting point and walk you through several processes: choosing the best broker, trading or holding stocks, some good companies to start investing in, and how to practice before investing your hard earned money. All questions were asked by Darren Stephens of RichOffReefer.com and answered by day trader Zachery Dias aka @marijuana_stocks on Instagram.


Which Online Broker is best for Marijuana Stocks?

I’ve personally only used 3 Brokers.  I started out with Scottrade, and they were bought out by TD Ameritrade.  I’ve also used Interactive Brokers, but I would never recommend that for a retail trader.  So, seeing as I’ve only used these brokers, I can’t give you advice from personal experience, but I do have an opinion. 

I’ve heard E-trade and Fidelity are decent for trading, including marijuana stocks, but they do have account minimums, unlike TD Ameritrade, which has none.  E-Trade has an account minimum of $500, and Fidelity has a minimum of $2500 to start. 

Out of all of these, even though my opinion is biased, I think the best brokerage firm is TD Ameritrade.  They offer a lot of resources, and are leaders in the field.  Trading Marijuana stocks, you’re going to be doing most of your research from google, and other websites, but if you’re going to pick a Brokerage Firm, I would choose TD Ameritrade. 


Can I Use the Robinhood App?

I would not recommend using the Robinhood App for purchasing marijuana stocks.  From what I have heard from people who ask me about Marijuana Stocks, Robinhood does not allow you to trade as many of them as other brokerages.  I am not sure why this is, or how many MJ stocks aren’t traded on Robinhood, but knowing that alone, I would not recommend you trade MJ stocks with Robinhood. 

However, If you wanted to start a small account and trade blue chip stocks, Robinhood is fine! 


How much should I invest?

No matter how much money you have, I wouldn’t recommend investing over $2000 into Marijuana stocks the first time you do it, because it is very easy to lose most of your money in this industry. (It’s also easy to make a lot)  Not until you have traded them for at least few months, would I go ahead and throw more than $2000.  


Can I start with $100?

Absolutely!  You’re not going to make much money if you start off with $100, but you will be able to get a feel for trading Marijuana Stocks.  Also, if you’re trading with only $100, with about $7 commissions, you should only buy 1 or 2 marijuana stocks, in 1 or 2 trades, so that commissions don’t eat up all of your capital.  I would personally recommend starting with no less than $200 so that commissions don’t eat your whole account away. 


Should I trade or hold my stocks?

My advice here, is that you should trade the Marijuana Penny Stocks, but hold the bigger, better Marijuana companies that are already established such as GW Pharmaceuticals and Canopy Growth.  For penny stocks, it’s best to buy them when they are low, like in the summer, and sell them around October to January, as they seem to get hyped up quite a bit every time Marijuana legalization is voted on.

I would not recommend trading US Marijuana Penny Stocks once they’ve already started to move up quickly in price, as you’ve probably missed the train if they’re already up 100%.  Jumping on a “moving train” isn’t good in real life, and it’s not good while trading MJ stocks either. 


What are some good companies to start investing in?

Well, I am going to be frank here, it is very difficult to tell which Marijuana companies are legit, and which are not.  A lot of the Marijuana Penny Stocks are junk, and will never amount to anything, but there is still a lot of money to make on their movement.  With penny stocks, it simply does not matter how good a certain company is, what really matters is how interested people are in it, and how many people are buying it. 

With that said, the most legitimate marijuana stocks are the ones that are listed on the NASDAQ, as they have to give up all of their financial information, and have to have some level of legitimacy, unlike the marijuana penny stocks traded on the OTC. 

A few marijuana stocks worth a look are CRON, CGC, and GWPH. SMG is also a great marijuana play, however it has been in a downtrend for quite some time, so I do not recommend investing in it until that ends. 

Additionally, a few marijuana penny stocks, that may not be as legit, that are always on my radar are POTN, CBIS, MSRT, MNTR and MCIG. 


Is there a way I can practice with fake money before I start using my hard earned money?

Absolutely!  One way is to paper trade, just using a notepad and pen while the market is open, using the listed ASK price, to make it realistic.  Also you should multiply the Stocks Volume for the day, times the price, to make sure there is enough movement in dollars to allow you to buy.  For example, if a stock has less than $20000 traded through it in a day, I would not touch it. 

TD Ameritrade’s free downloadable application “Think Or Swim” Allows you to trade without real money and is a good way to practice, although the prices you get aren’t 100% Legitimate, they do give you a feel for trading.