How to trade US stocks? Complete investment guide to start from zero

The US stock market is the most liquid and mature financial market globally. It attracts millions of investors each year, with an average daily trading volume exceeding 10 billion shares. Compared to stock markets in other regions, US stocks have inherent advantages—large market participation makes manipulation difficult, corporate operations are relatively stable, and the price discovery mechanism is efficient. This is also why many international companies choose to list in the United States.

However, many beginners still have questions about how to trade US stocks: What are the trading rules? How much capital is needed? What is the specific operation process? This article will systematically answer these questions to help you get started quickly.

Why invest in US stocks? First, understand the advantages

Lower trading costs than other markets

One of the biggest attractions of US stocks is the absence of lot size restrictions. You can buy just 1 share of Tesla (about $260), instead of the minimum 100 shares required in some markets. This is extremely friendly to small investors. In comparison, the Malaysian stock market requires a minimum of 100 shares; Taiwan’s minimum is 1000 shares (one board lot); Hong Kong stocks typically have 100-1000 shares per lot; A-shares have a minimum of 100 shares. This means you can buy a more diversified portfolio of assets in the US market with the same amount of money.

Unparalleled variety of choices

The US stock market has over 8,000 tradable stocks, far exceeding other countries’ markets. Top global companies are listed in the US, including Apple, Amazon, Google, Alibaba, TSMC, and more. You can access leading enterprises across technology, healthcare, consumer, financial sectors all within one market.

The market itself is a money-making machine

US stocks have a huge daily trading volume, good market liquidity, and are difficult for a single institution to manipulate. Plus, the US economy is the largest in the world, and most listed companies operate stably with strong profitability. This means your investment reflects real business performance, not gambling.

Trading rules you must understand before investing in US stocks

US stocks are listed on three main exchanges: New York Stock Exchange (NYSE), NASDAQ, and American Stock Exchange (AMEX).

Trading hours (Note: Eastern Time)

• Regular trading: Monday to Friday, 9:30-16:00 in summer time, 10:30-17:00 in winter time
• Pre-market trading: 4:00-9:30 in summer time, 5:00-10:30 in winter time
• After-hours trading: 16:00-20:00 in summer time, 17:00-21:00 in winter time

Core system features

• Trading system: T+0 (buy and sell on the same day)
• Trading currency: USD
• Minimum unit: 1 share
• Settlement for sale proceeds: T+2
• Price fluctuation limit: Unlimited, but with circuit breakers
• Commission: Broker fees range from 0.5% to 1%

Time zone differences are important for investors. If you are in Beijing, the US stock market opens from 9:30 PM to 4:00 AM Beijing time. If you want to do short-term trading, you will need to stay up late to monitor the market.

Which account type should you choose?

Different account types determine your trading permissions and capital requirements.

Cash Account The simplest choice, trading only with your own funds. You can trade stocks and ETFs but cannot short sell. The account opening threshold is low, usually around $500. The downside is no leverage.

Margin Account Similar to borrowing money from the broker to invest. Allows T+0 trading, both long and short positions, and trading stocks and ETFs. Minimum opening deposit is over $2000. The advantage is leverage can amplify gains, but risks are also increased.

CFD (Contract for Difference) This is the most flexible but riskiest way to invest in US stocks. Through CFDs, you can trade US stocks with very little margin (usually $50-$100). The trading size can be as small as 0.01 lots, supporting leverage and two-way trading, suitable for short-term traders. But leverage also means risks are multiplied; improper use can lead to margin calls.

How to trade US stocks? Comparing three major investment methods

Method 1: Direct purchase of US stocks

The most traditional and safest way. Buying real US stocks makes you a shareholder of the company.

Advantages are clear—T+0 system allows you to buy and sell on the same day, capturing opportunities quickly; transaction costs are very low, only broker commissions; long-term holding can generate dividends.

Disadvantages include time zone issues; frequent trading requires staying up late; account opening procedures are relatively complex.

This method suits investors who are optimistic about long-term trends and willing to hold. You can choose industry leaders like Microsoft, Johnson & Johnson, Intel, Procter & Gamble, or growth stocks like Nvidia, Alibaba.

Method 2: Investing in US stock ETFs

ETFs are baskets of stocks tracking specific indices or sectors, such as tech ETFs, healthcare ETFs, gold ETFs, etc.

The biggest advantage of buying ETFs is risk diversification. You don’t need to worry about a single stock crashing because the risk is spread out. Also, management fees for US ETFs are very low; for example, VOO charges only 0.04%, which is a tenth of some regional ETFs. You don’t need to monitor daily and can hold long-term.

The downside is that selecting the right ETF requires research; different ETFs within the same sector may have different investment strategies; ETFs also carry price spread risks, especially within the first half-hour after market open.

Method 3: Trading US stocks via CFDs

CFDs are financial derivatives based on US stock price movements. You are not buying real stocks but betting on price increases or decreases.

The biggest appeal is high leverage. Using $100 margin, you can control a position worth $1000, amplifying returns tenfold. It supports two-way trading, so you can profit whether prices go up or down. One account can trade multiple assets including US stocks, forex, gold, indices.

But this is also the riskiest method. Leverage amplifies losses as well. If your judgment is wrong, your account can be quickly liquidated. This method is only suitable for traders with risk tolerance and understanding of leverage mechanisms.

How should beginners start trading US stocks? From learning to practice

Theoretical knowledge is crucial

Before investing real money, you must master fundamental and technical analysis. Understand indicators like PE ratio, ROE, cash flow; learn to read candlestick charts, support and resistance levels. Warren Buffett’s long-term market outperformance is not only due to theory but also decades of practical experience from multiple financial crises.

Start small

Don’t go all-in at the beginning. Use small funds to experience the market, find your trading rhythm and style. Since US stocks can be bought with just 1 share, beginners have the opportunity to learn at low cost.

Choose the right targets

In the early stage, focus on companies with stable fundamentals and long-term growth potential. Tech giants like Apple and Microsoft are stable despite high stock prices; Nvidia has high volatility but huge growth potential; consumer companies like Johnson & Johnson and Procter & Gamble have long histories and stable dividends. Different choices correspond to different investment horizons and risk tolerances.

Risk management is fundamental

Set stop-loss points regardless of the method. If using leverage, be extra cautious—start with low leverage, fully understand margin maintenance requirements to prevent forced liquidation.

Summary: core points on how to trade US stocks

Success in US stock trading is not about short-term quick riches but about long-term accumulation. Theoretical learning and practical experience are equally important. You need to understand trading rules and investment principles, and continuously adjust your strategy through practice.

Choose the appropriate method based on your capital, risk tolerance, and time commitment—small-scale long-term investment with stocks or ETFs, or leverage tools if you have risk capacity and want short-term trading. But regardless of the method, remember: the market is always right, and managing risk is the most important lesson in how to trade US stocks.