Investing in Cannabis with Plus500
Cannabis has entered the world of trading and financial markets for some time now. With its legalization in some countries, it has become a financial value in its own right. As a result, online broker Plus500 has launched a tradable cannabis index via its CFD platform. It is indexed to the price of the BGCANG BITA GLOBAL CANNABIS GIANTS, which includes large cannabis production companies such as Tilray, Aurora Cannabis and GW Pharmaceuticals.
It is now possible to trade cannabis just like any other CFD. This investment will initially allow you to diversify your portfolio and reduce the risk of loss. However, cannabis production companies are not yet considered stable investments. They can even be risky because they evolve in an environment which itself is still unstable. Indeed, the medical marijuana industry is not yet clearly defined in all countries and often faces moral and legal dilemmas. These can affect the price of shares in companies like Bioscience and others.
Fluctuations in the price of the cannabis index may therefore be significant, particularly in the event of a legal or regulatory change in medical marijuana. However, it remains a growing sector. Most cannabis and cannabinoid biotechnology companies are increasing their production capacity to meet the growing demand for medicinal cannabis products. Companies such as Canopy Growth and Tilray have grown exponentially in terms of volume, despite also being highly exposed to volatility and price fluctuations.
With Plus500, the leverage of the cannabis index is high (1:20). This is of course an advantage when gains are multiplied but with the volatility of this index, the risk is equally important. Plus500 also offers tight spreads and no trading fees for all cannabis-related stocks. By trading Cannabis CFD through Plus500, you will benefit from a variety of risk management tools that can help you negotiate CFDs for cannabis stocks.
Among these, the stop orders which allow you to define a specific rate at which a position must close:
- To protect your profit, use the « close at profit » order.
- To minimize potential losses, « Close at Loss » or « Trailing Stop ».
- To ensure that the position closes at the exact rate set, « Stop Guaranteed ».
By choosing to use Plus500 to trade CFD cannabis, you have access to all the online broker’s features, both educational tools and market analysis. You benefit from the same trading resources as any other financial index. Going through Plus500 also gives you more security to embark on an index that is still considered volatile and risky.
Last Update on 11/02/19