Beginner's Guide to U.S. Stocks: Learn to Trade U.S. Stocks from Scratch and Seize Opportunities in the World's Largest Trading Market

Why Are Global Investors All Trading US Stocks?

If you want to invest in stocks, US stocks are definitely an unavoidable choice. The reason why the US stock market attracts investors worldwide is no accident.

First, the US stock market is the most mature and has the largest trading volume globally. The daily trading volume often exceeds 10 billion shares, which means the market is very difficult to manipulate. In comparison, other countries’ markets are smaller, and small-cap stocks are more easily influenced by capital.

Second, the United States is the world’s largest economy, with a large population and an active domestic demand market. Companies listed here generally operate stably, and their development prospects are relatively reliable. Many high-quality non-US companies, such as Alibaba, JD.com, TSMC, and others, choose to list in the US to access a larger pool of financing and investors.

Furthermore, the US stock market has transparent trading systems, well-developed regulation, and no excessive trading restrictions, providing investors with a relatively fair competitive environment.

Trading Rules You Need to Know Before Investing in US Stocks

To trade US stocks, you must first master the basic trading rules. These rules determine whether your investment strategies can be effectively executed.

The three major US stock exchanges are the New York Stock Exchange (NYSE), NASDAQ, and the American Stock Exchange (AMEX). Among them, NASDAQ is known for technology stocks, attracting giants like Apple, Amazon, Google, Tesla, and many promising startups.

Trading hours for US stocks are from 9:30 AM to 4:00 PM Eastern Time (ET) Monday to Friday during daylight saving time, or 10:30 AM to 5:00 PM during standard time. Additionally, there are pre-market trading (4:00-9:30 or 5:00-10:30) and after-hours trading (4:00-8:00 or 5:00-9:00). Note that these times are in Eastern Time (GMT-5), so investors in different regions need to convert to their local time zones.

Trading system: US stocks adopt a T+0 mechanism, meaning stocks bought on the same day can be sold on the same day, offering liquidity far superior to other markets. Settlement for stock sales is T+2. Unlike domestic markets, US stocks have no daily price limit but have circuit breakers as risk control measures.

Trading costs: US stock commissions are usually around 0.5%-1% (electronic trading) or 1% (manual trading). Compared to other markets, these rates are relatively low.

Different Account Types Determine Your Investment Approach

When opening a US stock account, you need to choose the appropriate account type based on your investment style, as operational permissions vary significantly.

Cash accounts are the most basic, typically requiring a minimum deposit of $500. These accounts are straightforward; investors can trade stocks and ETFs but cannot short sell. Stocks follow the T+0 trading system, with a settlement cycle of T+3. Suitable for beginners with limited funds who prefer steady investing.

Margin accounts offer more flexibility. The minimum deposit is usually over $2,000. These accounts allow investors to borrow money from brokers for margin trading, support T+0, and enable both long and short positions. The biggest advantage is leveraging to enhance returns, but risks are also increased.

Contracts for Difference (CFDs) have become popular in recent years as a third option. Trading US stocks via CFD platforms requires a low minimum deposit, sometimes as little as $50-$100, with a minimum trade size of 0.01 lots. CFDs also support T+0 and two-way trading (long and short), making them especially suitable for short-term traders and those employing advanced trading strategies.

Why Are US Stocks Especially Suitable for Small Investors?

Trading US stocks has a unique advantage: you can trade with just 1 share. This is significant for small investors.

For example, want to invest in Tesla? Just one share, costing around $260, makes you a shareholder. This flexible trading unit is hard to achieve in other markets. In contrast, Malaysia’s minimum trading unit is 100 shares (1 lot), Taiwan’s is 1,000 shares, Hong Kong stocks range from 100 to 1,000 shares, and China’s A-shares are 100 shares. Buying stocks in these markets often requires initial capital several times higher.

Thanks to this feature, US stocks have relatively low trading costs and are more suitable for investors with limited budgets to flexibly allocate assets.

US Stock Market Offers Rich Choices and Many Opportunities

There are over 8,000 listed companies in the US stock market, far exceeding the number in other countries. Moreover, the US has a large-scale blue-chip stock sector (such as Apple, Microsoft, Johnson & Johnson, Procter & Gamble, Walmart, etc.) as well as many growth and innovative companies.

NASDAQ is especially known for its concentration of tech stocks. Nvidia, as a leader in programmable graphics processing technology, has become one of the hottest stocks in recent years. Intel, the world’s largest semiconductor company, has a 52-year history of product innovation. Microsoft dominates the global office market with Windows OS and Office software. Amazon has pioneered the era of e-commerce and cloud computing.

Besides traditional giants, there are many promising startups in US stocks. As a global innovation hub, many emerging tech and business model companies are listed in the US, offering investors valuable opportunities to participate in innovation and growth.

Three Ways to Trade US Stocks: Stocks, ETFs, CFDs

Route 1: Buying Real US Stocks

Buying real US stocks means you become a genuine shareholder, enjoying the benefits of the company’s operational results. High-quality US companies are often reasonably valued and pay generous dividends, providing good returns.

Advantages of this approach:

• T+0 trading allows you to buy and sell on the same day, capturing short-term opportunities, with excellent liquidity

• Very low trading costs, only paying broker commissions without other fees

• Favorable US capital gains tax policies make returns more attractive

Disadvantages:

• Time zone differences can cause trading delays; short-term investors need to stay up late to monitor the market, which can be physically demanding

• Opening a real account involves more complicated procedures

You can trade through domestic brokers’ agency services, with fees usually around 1%. Note that while capital gains are tax-free, dividends are subject to a 30% withholding tax.

Route 2: Investing in US Stock ETFs for Diversification

ETF (Exchange-Traded Fund) is a type of fund traded on stock exchanges. The US market offers a wide variety: technology ETFs, healthcare ETFs, gold ETFs, bond ETFs, etc.

Key advantages of choosing ETFs:

• Diversify risk by holding a basket of assets, avoiding individual stock uncertainty

• Extremely low management fees. Due to lower fixed costs and large fund sizes in the US, fee rates can be as low as 0.04%, only one-tenth of domestic ETFs

• No need to spend much time researching individual stocks, suitable for lazy investors

But ETFs also have considerations:

• Different ETFs within the same sector may vary greatly in specific focus, requiring careful judgment

• Like stocks, they carry price gap risks, especially within the first 30 minutes after opening

Route 3: Leveraged Trading with CFDs

CFDs (Contracts for Difference) are financial derivatives for various assets, including US stocks. Investors trade based on US stock price movements without owning the actual stocks.

Highlights of CFD trading:

• High leverage flexibility, controlling large positions with a small margin, enabling excess returns

• Fully supports T+0 two-way trading, allowing profit from both rising and falling markets, ideal for short-term traders

• Opens the door to diversification. One account can trade US stocks, forex, gold, indices, cryptocurrencies, and more

But risks must be carefully managed:

• Leverage amplifies risks. Improper use can lead to huge losses or margin calls

• Before establishing a position, thoroughly assess your risk tolerance

Comparing the Three Methods: Find the Route That Suits You Best

In short, if you have limited funds, want to leverage to amplify returns, and can bear higher risks, CFDs are a good choice. If you prefer steady investing, risk diversification, and convenience, ETFs are more suitable. If you believe in the long-term growth of specific companies and have sufficient capital, direct investment in US stocks is the classic route.

Psychological Preparation for Beginners Trading US Stocks

Trading US stocks is not an overnight success. Warren Buffett’s legendary status is not only due to his investment theories but also because he has experienced multiple financial storms and accumulated rich practical experience. Having seen all kinds of market turbulence, he can calmly respond to any fluctuations.

Beginners should avoid rushing for quick profits. Both theoretical learning and practical operation require solid mastery. It is recommended to practice thoroughly with a demo account, understand market logic, and then start small with real funds. The market always rewards those with patience, willingness to learn, and risk control.

Remember, the secret to becoming a consistent winner in the investment market is the perfect combination of theory and practice, along with eternal respect for risk.