Steven R. Gormley

You’ll find no shortage of investing strategies and schemes online for earning a fortune trading stocks, but no magic formula exists. If such a formula did exist, the person who discovered it probably wouldn’t be so eager to share it or to try to make money selling the “foolproof” technique.You can also find plenty of investment gurus online touting the best cannabis companies or stocks to invest in or predicting what will be the next big thing in cannabis, but can you really trust them?

Investing always carries some risks, but momentum investing in cannabis stocks has some unique risks you should be aware of before trying it. This article explains some of the risks and provides guidance on how to avoid them. (Most of the time, just knowing of the potential threat is all you need to avoid it.) Before adopting any investment strategy with real money, try it with fake money.

You’re going to invest in cannabis. Remember that investing in cannabis is risky business. Many people who invested years ago got the jitters, sold their shares, and lost a lot of money. Some people lost money to con artists or well-intentioned friends or family members. Others lost out because they invested in cannabis businesses that didn’t make it.

Before you get into the nitty gritty of the different choices you have when placing an order to buy or sell shares in a cannabis company, you should be familiar with the concept of the bid-ask spread. The bid-ask spread is the difference between the price a buyer is willing to pay for shares and the price a seller is willing to accept.

If you’re more interested in cannabis-focused exchange traded funds (ETFs), venture capitalist (VC) funds, or private equity (PE) funds, than you are in individual cannabis stocks, you can find the best tools for tracking down cannabis funds. Most websites and online brokers that feature stock screeners also include an ETF screener, but they rarely include screeners specifically for cannabis ETFs or for VC or PE funds, which makes the Daily Marijuana Observer’s investment fund databases so unique and so useful to you as a cannabis investor.

Momentum investors (speculators) lean toward technical analysis instead of fundamental analysis when choosing which stocks to buy, when to buy, and when to sell. Investors who rely on technical analysis spend most of their time looking at charts to spot patterns in an attempt to predict the future movement of a stock’s price.

One of the key benefits of the Marijuana Stock Universe and the Daily Marijuana Observer’s database is that they cover a wide range of exchanges and markets on which cannabis stocks are traded, including over-the-counter (OTC) stocks. OTC stocks (many of which are penny stocks, meaning they sell for less than five bucks a share) are stocks that aren’t listed on the major exchanges, such as the New York Stock Exchange, Nasdaq, or the Toronto Stock Exchange.

Whether you decide to place your cannabis investment buy-or-sell orders through a full-service broker or financial advisor, or through an online discount broker, do your research to ensure that the person or firm is competent, reputable, trustworthy, and reliable. Know what to look for in a broker and an advisor and what to watch out for.

The single best stock-screening tool for tracking down cannabis stocks to invest in is (drumroll, please!) the Marijuana Stock Universe, made available by the generous folks at The Marijuana Index. The Marijuana Stock Universe is a searchable database of all marijuana and hemp stocks listed on the following markets in the U.