How To Invest In Penny Pot Stocks

How to Invest in Penny Pot Stocks

A penny pot stock is a penny stock, a stock that trades for less than $5 a share, that is invested in marijuana.

The rise in penny pot stocks has been slow-moving until this year when more lax regulations were introduced, and more states are moving to legalize marijuana.

With these penny stocks showing more promise every year, it’s a great time to start investing in them now. These stocks allow investors to hold many shares and return a substantial profit with even the most minor increases.

How to Invest in Penny Pot Stocks

Penny pot stocks are usually trading off major exchanges. Stock exchanges such as Nasdaq have requirements for listing for the companies that trade on them. Most people turn to over-the-counter marketplaces (OTC).

An OTC is a decentralized market where traders buy and sell stocks, commodities, or currencies between two people without a broker or central exchange.

Trading penny pot stocks is as simple as understanding where to trade and choosing your stocks. Many penny pot stock traders will set their price to under $1 and use a stock screening tool to find a stock they want to invest in.

These lists can be filtered to find marijuana stocks to choose from. Be sure to thoroughly research penny pot stocks and make sure they are legitimate.

You’ll want to open an account to trade with, but you want to be sure to pay attention to fee structure when trading in penny pot stocks.

Many brokers will charge commissions on a per-share basis, and you are holding a larger amount with penny stocks. You’ll likely want to find a broker that can charge a flat rate.

Choosing a flat rate will have a lower impact on your returns. You will also want to be sure to choose a broker that won’t impose a limit on the types of trades you’d like to execute.

Once you have all your ducks in a row, you can start trading.

Be Aware of Your Risks

When you decide to invest in penny pot stocks, you need to proceed with caution. Most mutual funds, index funds, and money managers are prevented from trading penny stocks, leading to a low following in the community, and liquidity is a concern.

It’s common to see investors get stuck in a position for days or weeks on end until there’s enough supply to enter or exit.

When investors are stuck, the price will fluctuate, and with penny stocks, it’s easy for traders to manipulate and make them look weak or strong or even pump and dump.

Be cautious when investing in not just penny pot stocks but all stocks. These stocks are always highly speculative and highly volatile in the penny stock area and can run high risks.

They lack liquidity, have large bid asks spreads, small market capitalization, and a limited following.

These penny pot stocks can be rewarding if you understand the risks, know the market, and can be efficient in making moves when you need to.

Did you know?

We make courses that can help you learn how to trade and develop trading skills whether you are just starting out as a beginner or have been trading a long time.

Check out our Course Academy to see how you can learn how to develop into the trader you’ve always wanted to be.

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