How to Trade US Stocks? A Complete Guide to Investing in US Stocks

Many people have heard of the US stock market, and some want to get in on the gold rush, but there are quite a few beginners who truly understand how to trade US stocks. The key questions have always puzzled many investors: What are the trading rules for US stocks? How much money is needed to open an account? How to select stocks to make money? This article will start from zero and answer these questions one by one.

Why invest in US stocks?

First, it’s important to clarify why US stocks attract investors worldwide.

Low threshold, small investors can participate

One of the biggest advantages of the US stock market is the low trading threshold. US stocks allow investors to buy by the share, with a minimum of 1 share to trade. Compared to other markets, Taiwan’s minimum trading unit is 1,000 shares, Hong Kong’s is usually 100-1,000 shares, and A-shares are 100 shares. The flexibility of US stocks is significantly higher. For example, Tesla is about $260 per share, far below the thousands of dollars required in other markets.

Rich stock selection, global giants are all here

US stocks have over 8,000 listed companies, far exceeding other countries’ stock markets. Not only are there American giants like Apple, Microsoft, Amazon, but also non-US companies like Alibaba, JD.com listing in the US. This is the world’s most liquid financial market, gathering innovative and growth-oriented companies.

Strong market liquidity, low manipulation risk

The average daily trading volume of US stocks exceeds 10 billion shares, attracting investors worldwide. The market is huge and transparent, making it extremely difficult for a few funds to manipulate prices. In contrast, small-cap stocks in smaller markets are more susceptible to manipulation.

Large market scale, strong corporate stability

The US is the world’s largest economy, with a large population and active markets. Companies listed here are usually stable in operations and generous in dividends, providing investors with substantial returns. Moreover, the US is the global innovation hub, with many emerging tech companies choosing to list in the US.

How to trade US stocks? First, understand the trading rules

Before starting to trade US stocks, you must master the basic trading rules.

The three major exchanges

US stocks are mainly traded on three exchanges: New York Stock Exchange(NYSE), NASDAQ(NASDAQ), and American Stock Exchange(AMEX). Among them, NASDAQ is known for tech stocks, gathering giants like Apple, Nvidia, Google, Tesla, and other global tech leaders.

Trading hours and time zone conversion

Standard US stock trading hours are in Eastern Time:

• Daylight Saving Time: 9:30-16:00
• Standard Time: 10:30-17:00

There are also pre-market trading(4:00-9:30 or 5:00-10:30) and after-hours trading(16:00-20:00 or 17:00-21:00). Investors need to convert these times to their local time zone to avoid missing trading sessions.

Key system points

• Trading system: T+0 (buy and sell settle on the same day)
• Trading currency: USD
• Trading units: starting from 1 share
• Price fluctuation limit: unlimited, but with circuit breakers
• Settlement of sale proceeds: T+2
• Fees: manual trading about 1%, electronic trading 0.5%-1%

How to trade US stocks? Choose the right account type

The capital needed to open a US stock account depends on the account type and broker platform. Usually, there are three main options.

Cash account - the simplest way to start

A cash account is the most basic option, using your own funds to buy stocks and ETFs. Short selling is not allowed. The settlement cycle is T+3, and the account opening threshold is usually around $500. This type of account is simple to operate and suitable for complete beginners.

Margin account - leverage to amplify returns

A margin account allows investors to borrow money from the broker for financing trades, adopting T+0 system, enabling both long and short positions. The biggest advantage is leveraging to boost returns, but the account opening capital requirement is higher, usually over $2,000. This account is suitable for intermediate investors with some experience.

CFD(Contract for Difference) - high leverage short-term tool

CFD is a financial derivative that allows investors to trade US stocks with very low margin($50-100). Investors do not need to hold actual stocks, only trade based on price movements. CFDs use T+0 mechanism, supporting both long and short positions, especially suitable for short-term traders and advanced strategies. However, leverage amplifies risk.

How to trade US stocks? Compare three main investment methods

Once the account type is decided, investors can choose different trading methods.

Method 1: Direct purchase of US stocks

This is the most traditional way, buying real shares of US-listed companies.

Advantages:

• T+0 system, can buy and sell on the same day, high liquidity
• Very low trading costs, only paying broker commissions
• Profits are not subject to capital gains tax

Disadvantages:

• Time zone differences, short-term trading requires staying up late to monitor
• Account opening procedures are relatively complex

How to open an account and buy?

Investors from different regions can use different channels: Taiwanese investors can trade through sub-brokerage(Sub-brokerage) with about 1% fee; Malaysian investors can use platforms like Moomoo, Rakuten Trade, with fees ranging from $3.8 to $25; mainland Chinese users can use brokers like Futu NiuNiu, WeBull. Note that dividends are subject to a 30% withholding tax.

Method 2: Investing in US stock ETFs for diversification

ETF(Exchange-Traded Fund) is a fund traded on exchanges, offering various options like tech ETFs, healthcare ETFs, bond ETFs, etc.

Advantages:

• Lower risk, diversifies individual stock uncertainties
• Very low costs, e.g., VOO charges only 0.04% management fee
• No need to spend a lot of effort researching individual stocks

Disadvantages:

• Similar ETFs in the same sector may differ significantly; careful judgment needed
• Price spread risk, especially more obvious within the first half-hour after opening

How to buy:

Platforms like Firstrade launched fee-free ETF trading in 2018, making them a popular choice among investors.

Method 3: CFD trading for quick profits

CFD is a derivative based on US stock price movements, without holding actual stocks.

Advantages:

• High leverage, small capital can control large positions
• T+0 mechanism, supports both long and short trades
• Multiple account options, can trade US stocks, forex, gold, cryptocurrencies, etc.

Disadvantages:

• Very high leverage risk, improper use can lead to huge losses
• Requires investors to have certain risk tolerance and trading experience

How to trade US stocks? Picking the right stocks is key

For beginners, choosing quality blue-chip stocks is a way to reduce risk. Here are some US stocks worth paying attention to:

**Tech: ** Apple(AAPL), Nvidia(NVDA), Microsoft(MSFT), Intel(INTC)

**Consumer: ** Amazon(AMZN), Starbucks(SBUX), Procter & Gamble(PG), Walmart(WMT)

**Healthcare: ** Johnson & Johnson(JNJ)

**Chinese concept stocks: ** Alibaba(BABA)

Choosing any US stock investment should be based on your own financial situation and trading strategy.

How to trade US stocks? Three key points every beginner must know

Combine theory with practice

How to trade US stocks cannot be rushed. It requires long-term accumulation and learning. You need to master theoretical fundamentals and accumulate practical experience. The success of many investment masters in history is because they have experienced multiple market fluctuations and responded calmly.

Fully understand the risks

Especially when using leverage, risks are magnified. Investors must assess their risk tolerance and allocate funds reasonably.

Continuous learning and adjustment

Market environments are constantly changing, and investment strategies need to be optimized continuously. Beginners should start with small amounts, gradually accumulate experience, and ultimately stand firm in the investment market.

The secret to trading US stocks lies in the perfect balance of patience, learning, and risk management.