Marijuana is a growing industry and penny stocks have a low barrier to entry. For a few dollars, you can own a piece of multiple marijuana companies. However, tracking these stocks down can be challenging. That’s why we’ve put together a list of the top marijuana penny stocks.

The list below offers both direct and indirect exposure to the marijuana industry. As the industry continues to grow, some of these stocks might double your money. Or a small investment could even triple in little time. Below, you’ll find the marijuana penny stocks list. And you’ll also find an important strategy to balance these high-risk, high-reward opportunities.

Top Marijuana Penny Stocks List of 11 Companies

*Stock data from March 2, 2022

How to Lower Risk When Investing in Penny Stocks

The marijuana industry is booming, but not every company will make the cut. On top of that, penny stocks can have large price swings. That’s why it’s useful to spread out your bets. You can buy a basket of stocks to help smooth out big swings in your portfolio.

Diversification is important to limit losses. And to put big losses in perspective, I remind myself that a 90% loss takes a 900% gain to break even. And a 900% gain doesn’t come around too often. So instead of betting big on one company, you can buy a basket of penny stocks to limit risk.

One good rule of thumb is to put no more than 4% of your portfolio in any one position. Then if you combo that with a 25% stop loss, you limit your portfolio loss to 1% on any given trade.

OTC Penny Stocks

Most of the penny stocks above trade over the counter (OTC). And OTC exchanges are less regulated than the New York Stock Exchange and the Nasdaq. As a result, you can find larger share mispricing. This is an opportunity for investors who conduct in-depth research.

The lower regulatory environment creates high-risk, high-reward opportunities. Also, OTC stocks tend to have much lower trading volume. So it might take hours, days or even weeks to fill your trade orders.

When trading OTC penny stocks, it’s good to look at the average daily trading volume. If it’s high, you’ll have a better opportunity at buying and selling the stock. Also, keep in mind that the trading volume can drop if negative company news comes out.

How to Trade Penny Stocks

One popular broker that’s popped up is Robinhood. However, Robinhood doesn’t allow trading select penny stocks on OTC exchanges. As a result, you’ll have to go through more traditional brokers such as Schwab, TD Ameritrade, Fidelity, etc.

Lucky for traders, many online brokers have dropped their fees to due to competition. Many brokers now offer zero-commission trading. And this is vital for smaller investors. Any fees can take a big cut of potential profits.

Now, the marijuana penny stocks listed above are a good starting point. But before investing, you should always do your own research. And if you’re looking for other low-priced stocks, check out our top penny stocks list. The markets are always moving and the best opportunities come and go…