Key Checklist to Confirm When Choosing a US Stock Investment Platform

Unlike in the past, many individual investors are now paying close attention to U.S. stocks for asset management and wealth building. While anyone can challenge themselves with U.S. stock investments regardless of age, selecting the right trading platform suited to your investment style is crucial for successful trading. This article will outline how to choose a trading platform and what to watch out for when investing in U.S. stocks.

5 Key Factors You Must Not Miss When Choosing a Trading Platform

There are many platforms that support trading U.S. stocks. However, to enhance the stability and efficiency of your investments, you need to consider several essential criteria.

1. Regulation and Security System

The first thing to verify is whether the platform is officially regulated. For overseas trading platforms, check if they are authorized by major financial regulatory authorities such as the U.S., Australia, or the UK. Also, ensure that customer assets are managed separately from company assets and that security measures like two-factor authentication are in place. These checks are your first line of defense against fraud or asset leakage risks.

2. Variety of Trading Products

The range of assets supported by the platform is an important criterion. If the platform handles not only U.S. stocks but also bonds, commodities, cryptocurrencies, etc., it benefits portfolio diversification. Additionally, depending on your investment strategy, you should verify if short(selling) positions or leverage trading are supported.

3. Transparent Fee Structure

Fees directly impact your final returns. Consider all costs including trading commissions, spreads, currency exchange fees, and withdrawal fees. Some platforms advertise no trading fees but may have high spreads or currency exchange charges, so comparing total costs is essential.

4. Customer Support and Language Services

Prompt customer support is essential when issues arise during trading. Check if the platform offers various support channels such as live chat, email, or phone, and whether Korean language support is available. This not only affects trading convenience but also your ability to respond in emergencies.

5. Deposit/Withdrawal Methods and Processing Speed

Choose a platform that supports various deposit methods(credit cards, e-wallets, etc.) and processes deposits and withdrawals quickly, so you don’t miss market opportunities. Especially in rapidly changing markets, the speed of deposits and withdrawals can significantly influence trading performance.

Domestic Securities Firms VS Overseas Platforms: Which to Choose?

Platforms for trading U.S. stocks generally fall into two categories.

Strengths and Weaknesses of Domestic Securities Firms

Strengths: They are regulated by domestic financial authorities, so they are highly trustworthy. All services are provided in Korean, with won deposits and withdrawals, and disputes can be resolved quickly under domestic law. Additionally, they offer optimized features through recommended products on HTS(Home Trading System) for Korean investors.

Weaknesses: The range of tradable products is relatively limited, and there may be restrictions on short positions or high leverage trading. Also, system stability can vary depending on the domestic securities firm.

Strengths and Weaknesses of Overseas Platforms

Strengths: They generally offer a wider range of trading products and advanced features. You can freely utilize short positions, leverage, and various technical analysis tools.

Weaknesses: Since their headquarters are overseas, you must verify their safety beforehand. Some platforms may have limited Korean language support or not support won deposits and withdrawals. Troubleshooting can also be more complex in case of issues.

Initial Capital and Minimum Entry Requirements for U.S. Stock Investment

How much capital do you need to start investing in U.S. stocks?

The minimum deposit is usually very low. However, to actually buy stocks, you need to hold at least the price of one share of the stock you want to buy. For example, if the stock price is $100, you need at least $100.

Fortunately, many platforms support fractional investing(partial share purchases), allowing you to invest with less than the full share price. For example, if the stock is $100, you can buy 0.5 shares for $50 or 0.25 shares for $25.

Using leverage trading, you can open larger positions with less capital. With a 1:10 leverage ratio, $100 can control a $1,000 position. However, leverage also amplifies losses, so sufficient experience and risk management skills are necessary.

Essential Features Provided by Trading Platforms

To trade effectively, you should make good use of the features offered by the platform.

Technical Analysis Tools

Check if the platform provides various technical indicators such as MACD, RSI, Bollinger Bands, and price charts. These tools help analyze current trends and determine entry and exit points.

Research Reports and News

High-quality research reports and real-time news feeds support your investment decisions. Choosing a platform that provides easy access to analysis on the stocks you trade is beneficial.

Economic Calendar and Earnings Release Schedule

Major economic indicators and corporate earnings release dates can cause sharp stock price movements. Being aware of these schedules in advance helps in managing your positions.

Risk Management Features

Order settings like take profit, stop loss, and trailing stop are essential to prevent emotional trading and systematically manage risks. Also, features that allow you to view your portfolio status at a glance are important.

3 Must-Know Facts When Investing in U.S. Stocks

1. The Importance of Diversification

Investing in multiple stocks alone does not ensure diversification. Stocks within similar industries tend to move together, so true diversification involves spreading investments across different industries and asset classes. Investing in IT companies, essential goods, bonds, gold, etc., can reduce overall portfolio volatility.

2. The Necessity of Tax Planning

Capital gains from selling U.S. stocks are subject to capital gains tax. Profits exceeding 2.5 million won annually are taxed at 22%. Ignoring taxes can significantly reduce your final returns, so it’s important to plan for taxes in advance.

3. Consideration of Exchange Rates and Time Zones

Since U.S. stocks are traded in dollars, fluctuations in exchange rates affect your final returns. Even if stock prices rise, a weak dollar can reduce your won-based gains. Additionally, U.S. markets operate on different hours than Korea, so you should incorporate this into your investment strategy.

Continuous Information Gathering and Monitoring

To succeed in U.S. stock investing, you need to continuously gather information about your investment stocks. For well-known U.S. companies, information is easily available through Korean news, but for small or emerging companies, you may need to seek out research reports yourself. Many trading platforms provide Korean-language analysis materials, which can improve your information collection efficiency.

Conclusion: Prepare for Investment Success by Choosing a Wise Platform

Before starting U.S. stock investments, clearly define your investment style and goals. If you prioritize stability, domestic securities firms are recommended. If you want a variety of products and flexible trading options, overseas platforms are suitable.

Regardless of the platform chosen, you must thoroughly review the five core elements: regulation status, fees, customer support, deposit/withdrawal methods, and speed. Additionally, even after starting, continuously monitor research materials, system performance, and customer support quality to maintain an optimal trading environment.

If you lack experience in U.S. stock investing, it’s advisable to start with small amounts and gradually increase your investment size. This approach helps you adapt to market volatility and build your trading skills. Utilizing HTS recommended features can also help you establish a more systematic trading plan.