How to start your journey of trading US stocks? A complete guide from zero basics to live trading

The U.S. stock market, with its large scale, ample liquidity, and well-established system, has become a preferred asset allocation channel for investors worldwide. It attracts millions of overseas investors annually, with trading volumes exceeding hundreds of billions of dollars. So, for investors interested in trading U.S. stocks, how should they get started? This guide will break down each step of trading U.S. stocks in detail from three perspectives: market rules, account types, and investment strategies.

Essential Trading Rules for Trading U.S. Stocks

The Three Major U.S. Stock Exchanges and Trading Hours

The U.S. stock market consists of three main exchanges: the New York Stock Exchange (NYSE), the NASDAQ Stock Market (NASDAQ), and the American Stock Exchange (AMEX). These exchanges host the world’s top-tier listed companies.

The trading hours are set as follows:

Regular Trading Hours: Monday to Friday, Eastern Time, during daylight saving time from 9:30 AM to 4:00 PM; during standard time from 10:30 AM to 5:00 PM

Pre-market Trading: During daylight saving time from 4:00 AM to 9:30 AM; during standard time from 5:00 AM to 10:30 AM. Liquidity is lower during this period, suitable for professional traders.

After-hours Trading: During daylight saving time from 4:00 PM to 8:00 PM; during standard time from 5:00 PM to 9:00 PM. Volatility tends to be higher.

It is important to note that all times are in Eastern Time (GMT-5). Investors in different regions should convert to their local time accordingly.

Core Trading System of U.S. Stocks

The T+0 system is one of the most attractive features of U.S. stocks—you can buy and sell on the same day, which is very friendly to short-term traders. In comparison, many Asian markets adopt T+1 or T+3 systems, which greatly limit trading flexibility.

How Account Types Determine Your Trading Approach

To trade U.S. stocks, it’s essential to understand the differences brought by various account types. U.S. brokers typically offer three types of accounts:

Cash Account

This is the most basic account type, characterized by the lowest risk and straightforward operation. The account opening threshold is usually around $500. In a cash account, you can only purchase stocks and ETFs with actual funds you own, and short selling is prohibited. Stock trading follows the T+0 principle, but funds settlement takes T+3.

Suitable for: Conservative investors, long-term holders

Margin Account

This account allows investors to borrow money from the broker for margin trading, with a typical minimum deposit of over $2,000. The main advantage is support for leverage trading—you can control larger positions with less capital, and both long and short positions are supported.

Suitable for: Investors with some trading experience seeking maximum returns

CFD Account

This has become an increasingly popular choice in recent years, especially for traders with limited capital. Contracts for Difference (CFDs) are financial derivatives that allow trading based on price movements without owning the underlying stocks. Theoretically, leverage can reach 50-100 times. The account opening threshold is very low; some platforms allow opening with as little as $50-$100, with minimum trade sizes as low as 0.01 lots.

Suitable for: Short-term traders, high-leverage seekers, investors with limited funds

Why Global Investors Are Trading U.S. Stocks

Lowest Trading Costs Worldwide

One of the most attractive features of U.S. stocks is the absence of “lot size” restrictions—you can buy just 1 share. For example, Tesla’s stock price is about $260 per share, meaning an investor can buy just $260 worth of stock.

In contrast, the minimum trading units in other markets are much higher:

• Malaysia: minimum 100 shares (1 lot); buying Genting (approx. RM 5.5 per share) requires RM 550
• Taiwan: minimum 1000 shares; TSMC at NT$1065 per share costs over NT$1 million
• Hong Kong: typically 100-1000 shares per lot
• China A-shares: minimum 100 shares; Changshan Beiming at ¥25.63 per share requires ¥2563

From a cost perspective, the low entry barrier of U.S. stocks is obvious, making it especially suitable for small investors to gradually accumulate wealth.

Vast Selection of Stocks Covering Top Global Companies

The U.S. stock market has over 8,000 tradable stocks, far exceeding other countries’ markets. More importantly, many top global companies choose to list in the U.S.—Alibaba, JD.com, TSMC, Starworks, and others are traded on NASDAQ or NYSE. This is because the U.S. financial market offers the highest liquidity, providing companies with the greatest access to financing.

Home to the Most Innovative Companies Globally

NASDAQ is renowned as a hub for tech stocks, with giants like Apple, Amazon, Google, and Tesla trading there. Additionally, many cutting-edge tech companies (AI, biotech, new energy, etc.) prefer to list in U.S. markets, giving investors opportunities to participate in future industry growth.

Extremely Low Market Manipulation Risk, Daily Trading Volume Exceeds 10 Billion Shares

U.S. stocks often have daily trading volumes over 10 billion shares, attracting hundreds of thousands of investors worldwide. This massive market scale makes it difficult for individual institutions to manipulate stock prices. In contrast, smaller markets’ stocks are more susceptible to price pushes by funds.

Robust U.S. Economy and Strong Corporate Profitability

As the world’s largest economy, the U.S. has a large population, strong consumer spending, and an active market. In this macro environment, listed companies tend to operate stably and pay generous dividends, offering good long-term investment returns.

List of High-Quality U.S. Stocks Worth Watching

As a beginner, you should prioritize companies with solid fundamentals, clear industry positions, and long-term growth potential. Here are some noteworthy stocks (for reference only; always consider your financial situation and risk tolerance before investing):

Tech Giants: Apple(AAPL), Microsoft(MSFT), Nvidia(NVDA), Amazon(AMZN)—these companies dominate their respective fields, with strong cash flow and stable dividends.

Semiconductor Industry: Intel(INTC)—the world’s largest semiconductor manufacturer with 52 years of product innovation.

Healthcare: Johnson & Johnson(JNJ)—with 250 subsidiaries, products sold in 170 countries, a leader in medical devices and pharmaceuticals.

Consumer Staples: Procter & Gamble(PG)—the world’s largest producer of daily consumer goods, recognized as one of the most respected companies in the Fortune 500; Walmart(WMT)—the world’s largest retailer with stable operations and a long history of dividends.

Chinese Concept Stocks: Alibaba(BABA)—diversified in e-commerce, payments, and fintech; Starbucks(SBUX)—a global coffee chain leader.

Three Mainstream Ways to Trade U.S. Stocks Compared

Method 1: Direct Purchase of U.S. Stocks

This is the most traditional investment method—buying actual listed company shares to become a shareholder. Your returns come from stock price appreciation and dividends.

Core Advantages:

• T+0 trading system, can buy and sell on the same day, maximum flexibility to seize investment opportunities
• Very low transaction costs, only broker commissions, no other taxes
• U.S. stock investment gains are not subject to capital gains tax in the U.S. (but dividends are subject to 30% withholding tax)

Main Disadvantages:

• Need to adapt to time zone differences; short-term traders may find it exhausting to stay up late monitoring the market
• The account opening process is relatively complex, involving identity verification, tax reporting, and other documents

How to Buy:

• Investors in Taiwan can use sub-brokerage channels via domestic brokers to place orders overseas, with fees around 1%
• Malaysian investors can use platforms like M+ Global, Moomoo, Rakuten Trade, with fees ranging from $3.8 to $25
• Mainland Chinese users can trade via apps like Futu NiuNiu, WeBull, etc.

Method 2: Investing in U.S. Stock ETFs

ETF stands for “Exchange-Traded Fund,” which tracks an index or sector. The U.S. market offers thousands of ETFs covering tech, healthcare, gold, bonds, and more.

Why U.S. Stock ETFs Are Especially Cheap: The U.S. fund industry is highly competitive, with lower fixed costs, leading to very low management fees. For example, the S&P 500 ETF(VOO) has an annual management fee of only 0.04%, one-tenth of Taiwan’s ETF fees.

Core Advantages:

• Lowest risk—one fund holds dozens or hundreds of stocks, automatically diversifying risk
• Cheapest costs—management fees as low as 0.04% annually
• Hands-off investing—no need to pick individual stocks, suitable for lazy investors

Main Disadvantages:

• Differences among ETFs in the same sector can be significant; requires in-depth research
• Price spread risk, especially with high volatility within the first 30 minutes after market open

Purchase Channels: Firstrade launched zero-commission ETF trading in 2018, making it a popular platform.

Method 3: Trading U.S. Stock CFDs

CFDs are financial derivatives based on the price movements of U.S. stocks. You do not own the stocks but bet on their price directions.

Core Advantages:

• Highest leverage—up to 50-100 times, allowing small capital to control large positions
• Two-way trading—can go long (buy) or short (sell), profiting from both rising and falling markets
• Most trading instruments—can trade U.S. stocks, forex, gold, indices, cryptocurrencies, etc., in one account
• Lowest account opening threshold—starting from $50-$100

Main Disadvantages:

• Leverage risk—amplifies both gains and losses; improper use can lead to loss of principal
• Requires strong risk management skills and psychological resilience

Risk Reminder: CFDs are suitable for experienced traders who can handle high risks; beginners are advised to avoid high leverage trading.

Quick Comparison of the Three Methods

The table shows that different investment methods suit different investor profiles. If you have limited funds but want to leverage to boost returns and can tolerate risks, CFDs might be a quick entry point. For more stable and secure investing, buying quality U.S. stocks or ETFs is more rational.

Path to Becoming a U.S. Stock Trading Expert

There’s a saying—Warren Buffett’s legendary status isn’t due to innate talent but because he has experienced far more financial crises and market fluctuations than ordinary people. Having gone through the 2008 financial crisis, dot-com bubble burst, black swan events, and other extreme conditions, he has seen all kinds of storms and can remain calm in any market environment.

This principle applies equally to all investors trading U.S. stocks: theoretical knowledge and practical experience must go hand in hand. Don’t rush into the market; first build a solid knowledge framework, then gradually accumulate experience through small-scale practical trading. Every trade is a valuable learning opportunity—successful trades bring joy, while failures teach risk management.

Only by perfectly combining theory and practice can you steadily advance in U.S. stock investing and become a true veteran.