Why are global investors all positioning in U.S. stocks? The Complete Beginner's Guide to Trading U.S. Stocks

The US stock market is regarded as the “king” in the global financial system—daily trading volume exceeds 10 billion shares, bringing together top global companies like Apple, Tesla, Microsoft, and more, attracting millions of investors across borders to participate. However, for many beginners, the rules, account setup, and trading methods of US stocks remain a mystery. This article will comprehensively analyze how to start participating in US stock investment from scratch, focusing on trading mechanisms, account selection, and investment channels.

The Basic Framework of US Stock Trading

Trading Markets and Hours

The US stock market consists of three major exchanges: the New York Stock Exchange (NYSE), NASDAQ, and the American Stock Exchange (AMEX). Understanding trading hours is crucial for investors.

Standard trading hours follow Eastern Time: 9:30-16:00 during daylight saving time, and 10:30-17:00 during standard time (corresponding to GMT-5). This means Asian investors need to trade in the evening or early morning, which is another reason why US stocks attract global capital—the market never stops.

Additionally, US stocks offer pre-market trading (4:00-9:30 or 5:00-10:30, depending on the season) and after-hours trading (16:00-20:00 or 17:00-21:00), providing more flexible trading windows for investors in different regions.

Trading Systems and Fee Structures

US stocks adopt a T+0 trading system, meaning stocks bought on the same day can be sold on the same day, with liquidity far exceeding many Asian markets. Settlement for sales occurs on T+2.

Trading currency is USD, with a minimum trading unit of 1 share. Notably, US stocks have no daily price limit but have circuit breakers to prevent extreme volatility. Transaction fees depend on the trading method: manual trading about 1%, electronic trading 0.5%-1%. Compared to global markets, these rates are relatively low.

How to Choose the Right US Stock Account for You

The capital threshold for opening a US stock account depends on the account type. Usually, brokers offer two options for retail investors:

Cash Account

This is the most basic account type, allowing trading of stocks and ETFs but prohibiting short selling. It uses T+3 settlement, with T+0 trading available. The account opening requirements are generally low, with a common threshold of $500. Cash accounts are suitable for conservative investors and long-term holders, with relatively manageable risks.

Margin Account

Margin accounts allow investors to borrow from brokers for leveraged trading, with minimum opening funds typically above $2,000. These accounts support T+0 trading, two-way operations (long and short), and trading of stocks and ETFs. The biggest advantage is the ability to use leverage to amplify returns, but this also increases risks, requiring investors to have a certain level of risk awareness.

CFD Account

In recent years, Contracts for Difference (CFD) have become a new option for trading US stocks. Through CFDs, investors can open accounts online with very low thresholds (minimum 0.01 lot), and margin requirements are only $50-$100. This method is suitable for short-term traders and investors with advanced strategies but also requires a clear understanding of leverage risks.

Core Advantages of US Stock Investment

Minimizing Trading Costs

Compared to markets like Hong Kong, Taiwan, and A-shares, US stocks offer significant cost advantages. There are no lot size restrictions, and trading can start from just 1 share. For example, Tesla’s stock price exceeds $260, but investors only need $260 to participate. In contrast, Taiwan requires a minimum purchase of 1,000 shares, A-shares require 100 shares, Hong Kong stocks usually require 100-1,000 shares, and Malaysian stocks start at 100 shares. For investors with limited funds, US stocks are clearly more friendly.

Rich Stock Selection

US markets list over 8,000 companies, far more than other countries’ stock markets. Non-US companies like Alibaba, JD.com, TSMC, and Starbox are also listed on US exchanges because the US financial market provides the best liquidity and financing convenience globally. This diversification creates more opportunities for investors.

Innovation and Growth Incubators

NASDAQ is renowned for its concentration of tech stocks—Apple, Amazon, Google, Tesla, and other global tech giants gather here. As a global innovation hub, many startups and emerging tech companies prefer to list on US exchanges, providing investors with opportunities to participate in future development.

Market Liquidity and Manipulation Risks

With an average daily trading volume exceeding 10 billion shares, US markets attract global institutional and individual investors, making market manipulation by a small number of funds almost impossible. In contrast, smaller markets are more susceptible to manipulation, especially in small-cap stocks.

Economic Scale and Corporate Stability

The US is the world’s largest economy, with a large population, strong domestic demand, and high market activity. In such a macro environment, listed companies tend to operate relatively stably, reducing systemic risks.

Selected US Stock Investment List

For beginners, focus on companies with long-term growth potential or consistent profitability. Here are some representative US stocks worth paying attention to:

Technology: Apple (AAPL), NVIDIA (NVDA), Microsoft (MSFT), Intel (INTC), Amazon (AMZN)

Consumer & Retail: Walmart (WMT), Starbucks (SBUX), Procter & Gamble (PG)

Healthcare: Johnson & Johnson (JNJ)

Chinese Concept Stocks: Alibaba (BABA)

Most of these companies have strong international competitiveness, stable cash flow, and dividend potential. However, any investment should be considered in conjunction with personal financial situation and risk tolerance.

Three Main US Stock Investment Channels Compared

Buying US Stocks Directly

Purchasing real US stocks means becoming a shareholder and sharing the company’s operational results. Advantages include: T+0 mechanism allowing same-day buy and sell, flexible opportunity capture; very low transaction costs, only broker commissions; US capital gains tax benefits making returns more attractive.

Disadvantages include: time zone differences requiring night-time monitoring for short-term trading; relatively complicated account opening procedures. Taiwanese investors can trade via sub-agency (about 1% fee), Malaysian investors via platforms like Malacca Securities, Moomoo (fees vary from $3.8 to $25), and mainland Chinese investors via Futu NiuNiu, WeBull, etc. Note that while capital gains are tax-free, dividends are subject to a 30% withholding tax.

Investing in US Stock ETFs (Exchange-Traded Funds)

ETFs are special open-ended funds traded on exchanges, with thousands of options in the US market (tech ETFs, healthcare ETFs, bond ETFs, etc.). Advantages include: risk diversification, avoiding single-stock risks; low management fees (e.g., VOO at only 0.04%, one-tenth of Taiwan ETFs); no need to pick individual stocks.

Disadvantages are that different sectors’ ETFs vary greatly in investment scope; there is a spread risk, especially within the first 30 minutes after market open. Platforms like Firstrade offer commission-free ETF trading.

CFD Trading

CFDs are financial derivatives based on US stock price movements, where traders speculate on price changes rather than owning actual stocks. Advantages include: high leverage flexibility, just pay margin to leverage; T+0 mechanism supports two-way trading, suitable for short-term; diverse trading instruments, including US stocks, forex, gold, indices, and cryptocurrencies within one account.

Disadvantages include that improper use of leverage can amplify risks, requiring investors to fully understand their risk tolerance.

Choose Your Trading Path

These three methods suit different investors: small-capital investors seeking leverage for higher returns, long-term investors wanting to share company growth, and passive investors seeking risk diversification via ETFs.

Final Advice on US Stock Investment

Investing in US stocks is a long-term journey. Warren Buffett’s extraordinary success stems from enduring far more financial cycles than most—multiple financial storms, market crashes, economic recoveries—these experiences make him accustomed to market fluctuations and able to respond calmly under any circumstances.

For beginners, patience is key. Theoretical learning and practical operation must go hand in hand. Start with small funds, accumulate experience through practice, and gradually build your own investment system. Only in this way can you become a true winner in the vast world of US stock markets.