Complete Guide to Stock Investment for Beginners: A Must-Read for 2025

Friends new to the stock market are often overwhelmed by dazzling information and don’t know where to start. This comprehensive guide will help you understand the core elements of stock investing, making your first investment less daunting.

Understanding the Two Main Choices in Stock Investment: Taiwan Stocks and US Stocks

Before deciding to invest, it is crucial to understand the characteristics of these two major markets.

Taiwan Stocks: Understanding the Advantages and Disadvantages of the Domestic Market

Advantages of Taiwan Stocks:

• Investors have a natural advantage in local companies, making it easier to track industry trends and company developments
• Regulatory agencies (such as the Financial Supervisory Commission) are relatively strict, making market risk more controllable
• Trading hours are concentrated (Monday to Friday 9:00-13:30), convenient for working professionals

Limitations to be aware of:

• Market size is relatively small, and liquidity may not be as sufficient as international markets
• Large fund inflows and outflows may face liquidity pressures
• Some listed companies have transparency and governance levels that lag behind international standards

Cost Structure of Taiwan Stock Investment: When investing in Taiwan stocks through a securities account, investors need to bear a transaction fee of 0.1425% of the transaction amount, plus a 0.3% securities transaction tax upon selling. Indirect participation via Taiwan stock funds or ETFs involves subscription fees, annual management fees, and internal deduction costs, totaling approximately 0.4%-2.5%.

US Stocks: Opportunities and Challenges in the Global Market

Why consider US stocks:

• The range of available stocks far exceeds Taiwan stocks, covering leading global companies in technology, healthcare, consumer sectors, etc.
• Innovative companies (such as in AI, new energy) are mainly listed in the US, offering significant growth potential
• Lower transaction costs, no securities transaction tax, with fees mostly between 0-0.1%
• The US SEC (Securities and Exchange Commission) enforces strict regulations, with complete and transparent financial reports, providing relative security for investors

Risks for beginners to consider:

• Insufficient familiarity with US market companies, higher research costs
• Time zone differences (Taiwan 9:30 PM to 4:00 AM), not conducive to daytime monitoring
• Currency fluctuations may erode investment returns, risking situations like “gaining in stock price but losing in exchange rate”
• Costs associated with USD exchange and possible international transfer fees

Choosing the Right Trading Channels and Cost Comparison

Trading Method 1: Direct Stock Investment

Trading Taiwan or US stocks via re-entrusted accounts: Investors can open accounts with domestic brokers (such as Yuanta, KGI, Fubon, etc.), with brokers acting as intermediaries. Fees are usually 0.25%-1% of the transaction amount, plus exchange fees of 0.0008% and trading activity fees (per share $0.000145 USD, minimum $0.07).

Major established brokers often offer discounts of 6-6.5 times, while some small to medium brokers may offer discounts as deep as 20-30%, but attention should be paid to system stability and service quality. If monthly trading volume reaches millions, negotiations for better rates are possible.

Trading through overseas brokers directly: This method eliminates middlemen, with fees possibly between 0-0.1%, but requires a certain level of foreign language proficiency and independence. Important considerations include choosing platforms with Chinese interfaces and customer support, and ensuring support for TWD deposits and withdrawals to reduce currency exchange steps.

Trading Method 2: Contracts for Difference (CFD)

CFD is a relatively new investment tool where investors do not own the actual stocks but trade based on price movements.

Core features of CFDs:

• Leverage trading allows controlling larger positions with a fraction of the margin (e.g., 1x, 2x up to 10x leverage)
• Supports long and short positions, profiting from market rises or falls
• Low minimum deposit, starting from a few hundred yuan
• Supports 24-hour global market trading with a single account for multiple markets

Cost and risk tips: Main costs are spreads (buy-sell price difference) and overnight interest. High leverage can amplify both gains and losses; without proper stop-loss settings, rapid liquidation is possible. CFDs do not involve actual ownership and do not pay dividends. When choosing platforms, ensure they are regulated by authorities like FCA, ASIC, etc.

Trading Method 3: Index Funds and ETFs

Why ETFs are suitable for long-term investors:

• Automatically diversify investment risk without selecting individual stocks
• Trading fees are similar to stocks, but trading taxes are only one-third of those for stocks
• Can be traded through existing stock accounts without opening new ones
• Management fees are low, around 0.03%-0.2%

Applicable scenarios and limitations: ETFs are suitable for investors seeking stable returns and who do not want frequent trading, but are less suitable for short-term trading (frequent trading can erode profits through fees). Since they contain many component stocks, ETF price movements tend to be moderate; investors seeking quick gains may find them less stimulating.

Beginners can start with broad-based ETFs like S&P 500 index funds or global market funds, combined with dollar-cost averaging strategies, for optimal long-term cost efficiency.

Practical Steps for Opening Accounts and Placing Orders

Basic steps for account opening

Domestic broker account opening: Bring dual certificates and seals to the broker’s office, or complete online registration on most broker websites. The process usually only requires submitting necessary documents, with staff guiding step-by-step. Almost all major brokers now support online account opening, eliminating the need to visit physical branches.

Overseas broker account opening: Choosing platforms with Chinese interfaces and customer support is more convenient. Complete identity verification (KYC), then deposit funds to start trading. Some platforms offer demo accounts with virtual funds for practice.

Order Placement Demonstration

Basic steps for stock trading: Log into the trading platform, search for the target stock code (e.g., “TSLA” for Tesla, “AAPL” for Apple in US stocks), enter the number of shares to buy, confirm details, and submit the order. Interface details vary slightly across platforms, but the core process is similar.

CFD trading operation: Search for the target asset, choose long (bullish) or short (bearish) position, set appropriate leverage (beginners advised 1-2x), enter order quantity, and confirm the trade.

Essential Knowledge for Stock Basics

Understanding Key Trading Concepts

Beginners need to master basic terminology such as market order (an order executed immediately at current market price), inside bid (buyers actively transacting at the seller’s price), outside ask (sellers actively transacting at the buyer’s price), etc. These concepts directly affect order execution efficiency.

Understanding Trading Time Windows

• Taiwan Stock Trading Hours: Monday to Friday 9:00-13:30, no midday break
• US Stock Trading Hours: Monday to Friday 9:30-16:00 (New York time), equivalent to approximately 9:30 PM to 4:00 AM Taiwan time
• US stocks also offer pre-market and after-hours trading, but with lower volume and liquidity

Recognizing Differences in Trading Units

Taiwan stocks are traded in lots of 1,000 shares, but fractional trading is supported; US stocks are traded per share without integer restrictions; Hong Kong stocks are traded in lots (often 20 or 100 shares). These differences affect initial capital requirements.

Basic Methods for Effective Market Monitoring

Interpreting Stock Price Data

Stock prices are real-time numbers on trading software, representing the price per share. Key prices to understand include:

• Current Price: The latest transaction price
• Closing Price: The last transaction price of the previous trading day
• Opening Price: The first transaction price of the day
• Intraday High and Low: The price range during the trading day

Mastering these basic data points is sufficient for initial investment decisions.

Free Market Monitoring Tools

Many free platforms are available, such as TradingView (with quite comprehensive free features), Investing.com, and Taiwan’s Goodinfo, all free to use. These tools provide candlestick charts, technical indicators, and other basic functions.

Advanced Analysis Tools (Future Learning)

As experience accumulates, you can gradually learn to analyze candlestick patterns, moving averages, MACD, and other technical indicators, as well as monitor institutional fund movements and interpret company financial reports. However, these are advanced skills, not necessary at the initial stage.

Four-Step Approach for Beginners to Select Stocks

Step 1: Start with familiar fields Invest in industries and companies you understand; accuracy will be higher. Those who frequently buy electronics can focus on semiconductor stocks; those who often engage with a particular industry will naturally be more sensitive to its trends.

Step 2: Prioritize large-cap blue-chip stocks Choose leading companies with large market capitalization and high visibility. These companies generally have stable fundamentals and are less prone to rapid rises or falls due to short-term hype, making risk more manageable.

Step 3: Use fundamental indicators to evaluate value Learn to use P/E ratio (price divided by earnings per share) or dividend yield to assess whether a stock is reasonably valued.

Step 4: Diversify across different stock types Avoid putting all funds into a single stock or industry; combine value stocks and growth stocks to maintain a balanced portfolio regardless of market conditions.

Four Common Mistakes for Beginners and Countermeasures

Mistake 1: Ignoring broker selection Small differences in fees can accumulate significantly over time. Choosing a platform with reasonable rates and good service quality is the top priority for cost savings.

Mistake 2: Blindly following the herd Buying stocks without thorough understanding of the company’s fundamentals often leads to being trapped. Before investing, review the company’s industry position, main business, financial data, and latest news.

Mistake 3: Lack of strict risk management Many retail investors tend to take profits early and hold onto losses, which can severely impact results. Set clear profit-taking and stop-loss targets (e.g., take partial profit at 20% gain, cut losses at 10% loss) and stick to them.

Mistake 4: Mismatched trading methods Day trading suits investors who can monitor the market all day; buy-and-hold suits busy professionals; swing trading requires technical analysis skills. Finding a strategy that matches your time and ability is key.

Advice for Beginners

Before investing real money, practice with a demo account for at least 3 months. Start with small amounts in real trading, record key information for each trade (entry/exit points, reasons, results), and review regularly. This reduces learning costs and helps establish disciplined investing habits.

The goal of investing is not to get rich overnight but to improve decision-making through continuous learning and experience, ultimately achieving steady wealth growth.