This is how you take your cannabis investing skills to the next level…

Successful stock investing takes more than knowing what stocks to own.

You need to know how to trade, especially when it comes to cannabis stocks.

Investors must take care not to pay too much for a stock. Or, when they exit the position, they need to make sure that they don’t do so clumsily and cut into hard-won profits.

They can also find themselves with far more risk on the table than they intended, so your position size needs pruning every now and then. Even when the risk is low, it just makes sense to harvest profits from time to time.

This is doubly true of cannabis stocks, most of which don’t trade with a lot of liquidity.

We’re still in the early stages of the cannabis game, and given the legal complexity of running a U.S. cannabis company, the major exchanges will not allow them to list.

And regardless of where they operate, most cannabis companies don’t quite meet the requirements to list on the New York Stock Exchange or Nasdaq – at least, not yet.

That leaves the Canadian Securities Exchange, or CSE, and over-the-counter, or OTC markets in the U.S. as the place to trade. Institutional investors are not yet in cannabis stocks in a big way. So, the trading is pretty thin.

To get the right price for a stock, and manage your position risk, you need a trading philosophy grounded in experience.

So right now, we’re going to show you how to take things to the next level and cash in on the life-changing wealth cannabis investing can offer…

Don’t Rush In

Subscribers to the Cannabis Investor’s Report and Cannabis IPO Insider have received a lot of trade recommendations from me over the months since we launched the National Institute for Cannabis Investors. Over that time, a common refrain subscribers hear from me is to “be patient,” and “be a tough trader.”

The first thing to know – and this is not something I can determine for you – is how many shares you want to own of any given stock. What makes a full position in any single stock is entirely up to you. Everyone has their own financial situation, appetite for risk, and goals.

But based on any subscriber’s personal assessment of how much stock they want to own, my initial recommendation is almost always to buy half of the intended position size. By that, I mean you determine how much in total you want to spend, and in your first trade, you buy half of your planned total position.

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I do that because of the power of dollar-cost averaging. When I recommend a trade, it’s because I know the stock will be worth a lot more in the future. But, over the near-term, prices react more based on external market factors than on long-term prospects. And if a stock price happens to go down after I make my recommendation, I want to take advantage of the opportunity for you to complete your position at a lower price.

That makes the average cost of your position lower and magnifies the potential profit you can earn on the stock when it ultimately goes much higher.

However, if the stock simply continues to shoot higher after my recommendation and I don’t feel it is prudent to buy the last half, that’s OK. Owning even half of a position in a stock shooting higher is still a great way to make a lot of money from investing in cannabis stocks.

Second, my recommendations always have a maximum price to pay for the stock.

I do this because I don’t want anyone overpaying for a stock out of the gate. Overpaying is the surest way to hamper the gains that cannabis stocks will deliver. I want my subscribers to make the most of their hard-earned investment dollars.

Also, our paid members comprise a large group, and when so many investors move to enter a position, this can run up the stock price over the near term.

So, I put the maximum price there to encourage patience. More often than not, in the event the price goes over my published maximum, the price backs off a bit and those diligently following my recommendations can get into their desired position size at a better price. It takes a tough mindset to do this, but, in my experience, that patience will pay off handsomely.

Position Management

Once you’re in a stock, position risk management becomes critical.

Think about managing risk like this. Say you own an equal dollar amount of five stocks. One of them doubles in price while the others stay the same. You now own twice as much of the stock that doubled as you intended, so the time is right to take some gains and add to another position.

Big money managers do this all the time, and they call it rebalancing. By doing this, you reduce the concentration of any single holding in your portfolio and add to cheaper, but still great, positions.

To help subscribers manage position size risk, I often tell them to sell half of their position when a stock has posted a big return – typically when it doubles in price from my original recommendation. This way they can pocket the original investment as gains, and any future gains on the remaining position will be pure profit.

In addition to managing position size, two other situations arise in which I give sell recommendations.

One is when a stock has rallied a long way, quickly, and the price has gone higher than I think it should over the near term. In this case, I’ll put out a sell alert, take the quick, easy money, and look for the next trade in which subscribers can put that stake to work. When the stock pulls back as I expect, I may recommend another buy at that time.

We did this back in February when I directed Cannabis Investor’s Report members to sell out of their Hexo Corp. (NYSEMKT: HEXO) positions.

Another situation in which to sell is simply when the prospects for the company take a dramatic turn for the worse. When the facts change, I change my mind, so a company that has proven its promise is less than what we originally thought gets sold.

Open Buy Recommendations

Before I leave you to your weekend, I want to address a question I often get from members when I recommend selling part of a position.

Cannabis Investor’s Report and The Cannabis IPO Insider add new subscribers every day. That means there are a lot of members adding positions long after I send my original trade alerts and at prices higher than my original limits.

The direction to sell a one-half position is for those that got in at my recommended price. I want them to take their original stake off the table and reap some profits. It’s part of the position management I mentioned above.

Recommending selling only half of a position that doubled means those members will still own the original full position in the stock. When you see that there is still an open buy recommendation on the stock, it’s because the stock has a long way to go. The gains we expect from cannabis will be multiples of the original amount invested, not a fraction. So you should know that any stock that still has a buy recommendation, even if I have directed some members to sell half, is one that I think you should own.

While recommending some members sell half of their position while simultaneously recommending that newer subscribers enter the position may seem like a contradiction, it has everything to do with managing position risk.

As always, when it comes to trading, practice patience and have a tough mindset. That way, you can be sure not to leave precious wealth building profits on the table.


Greg Miller

Executive Director, National Institute for Cannabis Investors

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Comments

17 responses to “Let This Philosophy Maximize Your Cannabis Profits”

  1. Hello Greg how are you?Those are principals among others that I utilize in my investing. Question Greg how does Hexo acquisition of Newstrikes Brand affects the ratings of either company in NICILytics? Does this move make Newstrikes Brand a better buy? Look forward to yours feed back. I hope you have a great weekend and much success to all of us in the future!!!!!

  2. I have pocketed 20K by following your instructions, Greg. Needless to say, I am thrilled to be a lifetime NICI member! Thank you from the bottom of my heart! Pam

  3. we really appreciate all of your advice and people like me/us know that you guys are the actual professional traders Wall Street guys that actually know things and we know that we don’t. personally speaking because I’m an average Joe who doesn’t know anything about trading I take Jack Bogle’s investment style buy and hold disciplined investing. if I was a professional trader I would buy and sell just like you guys but I know that I’m not and I don’t want to lose my shirt and other professionals have told us that the more you buy and sell the more likely you are to lose, we are in this thing for the Long haul meaning five years and beyond we are long on everything we are not selling anything, but of course we only own the best and we know that all stocks will be two thousand percent growth or higher guaranteed so we’re just going to wait on a big nest egg to develop. professional traders buy and sell daily average Joe’s by the best and hope but they definitely holds and don’t sell.

  4. When I join nici investors, I thought we were only going to choose the very best to buy and hold. I know that you guys know best, it’s just hard for me to see how selling is even an option right now when we haven’t even got banking other states act to pass yet even in the house. isn’t legislation supposed to get going and actually passed first and we get real pops and real growth before we actually start trimming off the edges after these stocks reach at least minimum 500% to a thousand percent growth first? I thought we were trying to build nest eggs and grow in financial volume high high volume financially not just sell all the time, aren’t we trying to become multi-millionaires?

    • I believe quality control will be a huge factor in the future pot industry. Which are the most notable companies out there. This would also apply to banks/ cash protectors. Your thoughts please.

  5. New Lifetime Member, and still finding my way… Thanks for all that you do… In the above article “Don’t Rush In” You state: “Second, my recommendations always have a maximum price to pay for the stock”. That is where I am confused; where do you publish a maximum price to pay? Both the Portfolio and the NIClLytics prices appear to be the current market value. I have seen in one alert/recommendation (TCNNF) maybe two that say at the end of the recommendation the max price to pay. Hoping NICI or other members will answer. Thanks…

  6. Matt how are you ? Welcome most of the time when Greg gives a recommendation at the end of the article, he also will have a maximum price to pay. I hope this helps and much success to you in the future in all you do!!! Have a great night!!!!

  7. I am new to this, I want to know when I click on the NICILytics I have to pay for another program to get more information when I thought the IPO inside was all I needed. Do I have to pay for life time member? where do I get a discount on this if so?

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