Risky Marijuana Stock Trading

By www.ProfitableTradingTips.com

http://profitabletradingtips.com/profitable-trading-tips/risky-marijuana-stock-trading
Marijuana possession and sales have
been legalized in several states.

There are publicly traded companies in
this new industry.

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But, is marijuana stock trading safe, or
risky?

the wall street journal looks
at legalized marijuana stocks.

marijuana legalization in multiple
states has ushered in a variety of
companies and funds that are selling
shares.

marijuana-related securities have
arrived in the form of over-the-counter
or penny stocks and special funds for
accredited or high-net-worth investors.

some investors have been playing this
market for several years already.

but while marijuana has been legalized
for medical and recreational use in a
short list of states, at the federal level
marijuana is still illegal.

The point is that the feds could come in
to any of these companies, arrest
everyone and close them down.

This makes marijuana stock trading
risky.

But is the profit potential in trading
these stocks?

According to the Journal legal
marijuana sales have gone up fomr $1.6
billion to $8 billion in the last two
years.

Trading Growth Stocks

Assuming that this industry grows and
does not get in trouble with the feds
one can look at this like simply trading
growth stocks.

growth stocks can make you rich, if you
get in early and sell before a market
correction.

trading growth stocks can also be very
profitable for traders who successfully
anticipate a collapse in stock price and
sell short or buy puts on the stock.

in trading growth stocks fundamental
and technical analysis both come into
play.

as in all stock trading and stock
investing, stock prices eventually land
where fundamental analysis would
predict.

however, the market enthusiasm that
occurs when a stock goes up becomes
contagious and stock price and price to
earnings ratio can quickly outrun the
fundamentals.

also, when fundamentals change, the
market quickly reacts, although there
can be a brief but profitable period of
market inefficiency as prices adjust.

there is profit to be made in trading
growth stocks on both the up and down
side.

So, just where is the profitable volatility
in marijuana stock trading?

Fundamentals of Running a
Marijuana Business

Although the technical approach may
be the best way to gain short term
profits in risky marijuana trading swing
trading based on fundamentals may be
more profitable in the long run.

the motley fool looks a marijuana
stock’s expenses.

gw pharmaceuticals inc. (nasdaq:
gwph ) has the richest pipeline of
marijuana-derived medicines in
development, and that has investors
flocking to pick up shares in hopes of
benefiting from the rising adoption of
such drugs.

but a flurry of research trials is also
costing the company big bucks, so
investors should pay close attention to
how quickly it burns through its cash
stockpile.

according to the tufts center for the
study of drug development, it costs $1.4
billion on average to successfully
develop and commercialize a new drug.

to add to this eye-opening figure, 90% of
all drugs that enter human clinical trials
fail to make it to market.

In trading risky marijuana stocks it may
be best to simply follow along as
medical marijuana companies develop
drugs.

If you can anticipate success at any
stage of FDA testing it will be very
profitable.

Risky Marijuana Stock Trading

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Risky Marijuana Stock Trading