How to Invest in Biotechnology Stocks
- 1). Open a brokerage account. Any standard broker, either full-service or online, will offer access to the biotechnology sector. These stocks trade on regular stock exchanges and do not require any special account privileges for their transactions.
- 2). Isolate all the stocks which participate in biotechnology. The sector is vast and features any company that engages in medical research or the development of vaccines and medications. Some companies overlap with other sectors. Many specialized biotechnology investors seek out only those companies with a clear and exclusive mission to accomplish a particular task, such as finding a cure for cancer.
- 3). Investigate the development schedules of biotechnology stocks that interest you. The dramatic movements in stock activity often correspond with specific dates in the company's development cycle. Since many of these corporations depend on FDA approval for their success, stock prices are strongly affected by FDA decisions. Do not purchase a biotechnology stock without knowledge of upcoming regulatory appointments for the company's research.
- 4). Buy stocks before important decisions to participate in the high risk-to-reward scenario provided by these influential moments in the sector. Because a major government decision on a particular stock could also significantly disrupt a company's progress, be prepared for substantial losses as well as wins. Thus, do not put all your investing capital in just one or two biotechnology stocks. Spread it around on multiple scenarios.
- 5). Sell all or part of your investment after a major decision affects the company's stock one way or the other. Substantial increases in stock price are often impulsive and fall back after the initial rally. To participate in the full extent of the rise, consider selling a portion immediately, and then holding the rest for possible further appreciation. Likewise, a company is unlikely to quickly recover from a bad government decision, and it is best to cut most of your losses and seek another opportunity, rather than hold onto the stock and wait for an eventual rebound.
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