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Beginner's Guide to Trading Pot Stocks: Day 1

Pot stocks have been the biggest craze in finance in 2018. Many Canada-based stocks in the cannabis industry have made massive moves this year, as Canada declared earlier this year that they would become the first major industrialized nation to legalize retail marijuana sales, starting in October 17th. Some US stocks in the marijuana industry have also seen some huge moves, as many states are looking to pass legislation in favor of deregulating the drug.  

In order to prepare you to capitalize on this massive trend in the markets, we are going to do a 5-day series teaching you  strategies we use to profit on weed stocks, and also show you all the best stocks to trade in the sector. At the end of the series, we are doing a free two-day webinar  going through our complete strategy we use to trade pot stocks. Here is what the series will cover:

  1. Intro Guide to Pot Stocks
  2. How to Trade $CGC
  3. How to Trade $CRON
  4. How to Trade $TLRY
  5. Series Round Up- Free Webinar Training

Today we will do an overview of pot stocks, and discuss why these stocks are the best stocks to trade in the market right now:

Why Trade Pot Stocks?

The answer is simple: They are momentum stocks. Momentum stocks are stocks that have a high probability of making BIG moves in a short period of time. Many pot stocks, like the 3 mentioned above, have a high probability of giving you a 5%-10% gains in an hour, or less. If you swing trade, you can make even bigger percentage returns, over the course of days and weeks. If you had bought CGC, CRON, TLRY a month ago, you would have more than doubled your money on all three stocks. It is crucial you understand the characteristics of these stocks that make them the best momentum stocks to trade right now:

Strong Uptrend

In trading, the trend is your friend. Trending stocks offer the best, high probability trades, and they are the easiest to make money on. All the pot stocks are in a strong up trend, meaning the price is trending in a series of higher highs and higher lows on its daily time frame. You can see how on the daily charts of the three stocks named above how they are all in uptrends:

pot stocks pot stocks pot stocks

These stocks will offer some great trading opportunities to the long and short side in the upcoming weeks and months. It is essential you learn how to trade these stocks to not just the long side, but also to the short side. We will give you setups for short selling these stocks later in the series and during our webinar. 

Strong Catalyst & Sector

All the pot stocks right now have a strong catalyst. Legalization of the drug in Canada, and possibly in more US states, is big news for these companies. This gives them a reason to increase in value, as there is so much hype in this sector at the moment. Stocks in a strong sector tend to trend together, giving you multiple trading opportunities in multiple stocks.

Huge Range

All of the stocks above have the capability of moving 5%-10% (sometimes more), in either direction, in a single trading day. This means that they are volatile. But it also means there is the possibility of making big gains in a short period of time. It is not unrealistic to see these types of moves in just 30 minutes during the market open. With our trading strategies, you can profit from this volatility instead of losing money on it like most people.

High Liquidity

All the best momentum stocks have strong volume and liquidity. This allows you to exit and enter your positions with ease, and this also means a lot of people are watching the same stock. This is a good thing, as it means there will likely be buyers to push the stock price up in the near future. However, this means you have to know strategies that will get you in early before these stocks make a big move.

Strategies For Trading Pot Stocks

Now that you understand why you should be trading pot stocks, you need to know the best strategies that allow you to make money. In the next article in the series, we will talk about one of the strategies we use to trade these pot stocks, and give you everything you need to know about how to trade the Canopy Growth stock ($CGC).

Free Webinar On Weed Stocks

Join our next live webinar where we will go through all Weed Stocks we're trading + get our Weed Stock Guide free. Reserve your seat here. 

About Kunal Desai

Kunal Desai is the Founder and Lead Instructor at Bulls on Wall Street. Since 2008, Kunal has helped thousands of traders reach their trading goals through his unique live trading courses. Kunal is a day trader by day and industry leading instructor by night.

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