Want to trade US stocks through delegated trading? Understand these 5 key points before placing an order.

Many Taiwanese investors are optimistic about U.S. stocks, but initially they often get stuck on the same question: should I use a full-replication (Futures) account or open an overseas brokerage directly? Today, let’s clarify the key points of full-replication, especially those costs and order techniques that are easy to get坑ed by.

What exactly does full-replication do? Why not buy U.S. stocks directly?

The essence of full-replication is simple: you place an order with a domestic broker, and the broker then delegates the order to an overseas broker to execute.

It sounds complicated, but for beginners, it can actually be more convenient. Because you don’t need to open a U.S. bank account, handle remittances, or deal with English platforms—paying in TWD and settling directly. The entire process is: you place an order via the Taiwan broker app → the Taiwan broker transfers to the overseas partner broker → the overseas broker executes on U.S. exchanges → the result is reported back to the Taiwan broker → your account is updated accordingly.

But there’s no free lunch. Full-replication is convenient, but the handling fees are significantly higher than those of overseas brokers. If you trade frequently, these costs can eat into your profits.

Full-replication vs overseas broker, where are the cost differences?

If you’re a small investor or trade infrequently, full-replication can still be cost-effective. But if you trade more than 5 times a month, going directly with an overseas broker is more economical.

Full-replication fee list: watch out for hidden costs

When buying U.S. stocks via full-replication, you need to pay not just one fee:

1. Domestic broker’s commission fee
This is the main cost, usually 0.1%-1%, with some having minimum thresholds ($25-$50 USD). Some brokers have eliminated low minimums, like Cathay Securities.

2. U.S. exchange fees
The SEC charges 0.00278% (only on sell), plus the exchange adds 0.00565%. It may seem small, but adds up over time.

3. TAF fee (Trading Activity Fee)
$0.000119 per share, capped at $5.95. Only charged on sell.

4. Tax costs
Dividends are subject to 30% income tax, which can be reclaimed via tax refund procedures—somewhat complicated. But if your annual overseas income is under NT$6.7 million, generally no extra tax is needed.

5. Bank remittance fees
Only Taishin Bank waives this; other banks may charge accordingly.

In total, buying a single U.S. stock can cost you 1-2%, and if you buy Chinese or Hong Kong stocks, the costs are even higher.

Full-replication trading rules: avoid these pitfalls

If you want to place orders via full-replication, you need to understand these restrictions:

✓ Only limit orders are allowed, no market orders
Meaning you must set a price in advance; you cannot place a market order based on current price. Good and bad—good because you won’t buy high, bad because you might not get filled.

✓ Account balance must be sufficient, but not exactly equal
Your deposit should be greater than the estimated transaction amount (considering exchange rate fluctuations). Excess funds will be refunded automatically. If insufficient funds, the order will fail.

✓ No margin trading, but day trading is allowed
Want to leverage with borrowed funds? Not possible with full-replication. But same-day buy and sell (day trading) is usually permitted.

✓ U.S. stock trading hours
U.S. time 9:30 am - 4:00 pm, converted to Taipei time:

• Daylight Saving: 21:30 - 04:00 next day
• Standard Time: 22:30 - 05:00 next day

Many people try to place orders right when the market opens after work, but they miscalculate the time and get stuck.

✓ Funds transfer has time lag
Buy: T+1 deduction; sell: T+3 funds credited. Don’t assume you can use the proceeds immediately after selling—wait 3 days.

✓ Exchange rate risk
Full-replication uses fixed exchange rates for settlement. You won’t benefit from favorable currency appreciation, but you can avoid losses from depreciation.

Full-replication vs CFD vs overseas broker, how to choose?

Full-replication is suitable for:

• Beginners who don’t want to deal with complex overseas platforms
• Long-term investors, trading less than 5 times a year
• Capital over USD 10,000 (to keep handling fees reasonable)
• Want to settle in TWD, avoiding foreign exchange hassle

Overseas brokers are suitable for:

• Frequent traders
• Want to invest in options, futures, or leverage products
• Comfortable with English platforms
• Large capital, where fee savings are significant

CFD is suitable for:

• Leverage amplification of gains
• Short-term swing trading
• Low handling fees (0.01%-0.015%)
• Willing to accept derivative risks

How to open a full-replication account in 4 steps

Step 1: Prepare documents

• ID card + second ID (health insurance card or driver’s license)
• Seal/stamp (for in-person account opening)
• Bank account copy

Step 2: Choose a broker
Comparison of major Taiwanese full-replication brokers (using electronic orders):

Cathay Securities is the cheapest (0.1%, no minimum), E.Sun Securities next (0.4%/35 USD), Taishin Securities (0.5%/35 USD). Others are generally around 0.5%-1%.

Step 3: In-person or online application
Tell the staff you want a full-replication account, choose settlement currency (TWD is most convenient), sign the agreement. Many brokers now support online applications, no need to visit branches.

Step 4: Deposit funds and start trading
Transfer money into the full-replication account, then you can buy U.S. stocks and ETFs.

U.S. stock order tips: must-know for beginners

Since you’ve decided to use full-replication, you should know how to place orders wisely:

1. Avoid the most volatile market times
The 30 minutes before U.S. market open (9:30-10:00 am US time) are highly volatile. Beginners should avoid trading then. Wait until after 10:30 am for more stable prices.

2. Use limit orders with time settings
Full-replication only allows limit orders. Set “Good for the day” or “Good until week” to prevent orders from lingering too long.

3. Leave room for exchange rate risk
When buying, account for unfavorable currency movements. Don’t rely on luck.

4. Buy in batches, avoid all-in
Splitting your purchase into 2-3 parts reduces risk of bad entries and helps average costs.

5. Watch market holidays in Taiwan and the U.S.
If banks or forex markets are closed, full-replication cannot process orders. Don’t try to buy right before holidays.

Full-replication vs direct overseas purchase, which to choose?

Reasons to choose full-replication:
— Convenient, all in Chinese, no remittance needed
— Long-term investors, few trades per year
— Don’t want to deal with English interfaces and complex tax issues

Reasons to choose overseas brokers:
— Zero commission, only pay exchange fees (negligible)
— Frequent trading, lower overall costs
— Want to trade options, futures, leverage products
— Good English skills, willing to explore on your own

Honestly, if your capital is large and trading frequent, overseas brokers’ cost advantages will dominate full-replication. But if you just want to casually invest in U.S. stocks, full-replication is sufficient.

Summary: Is full-replication worth it?

Full-replication is like the “comfortable option” for investing in U.S. stocks—convenient, safe, with Chinese-language service. But it comes at the cost of higher handling fees. If you’re investing for long-term asset allocation and trade less than 5 times a year, full-replication is enough.

But if you aim to profit from swing trading or frequent entries and exits, the handling fees can drag down your returns. In that case, directly using an overseas broker is more cost-effective.

Final advice: don’t obsess over finding the cheapest full-replication provider, as differences are minor. Focus instead on service quality, app usability, and whether customer support actively helps you get discounts. Sometimes saving a tiny fee isn’t worth poor service.