Complete Guide to Investing in U.S. Stocks: Seize the World's Most Mature Financial Markets

As the largest and most mature stock trading market in the world by trading volume, the US stock market attracts the attention of millions of investors. From tech giants to traditional blue chips, the US stock market gathers the world’s top listed companies. However, for many beginners wanting to invest in US stocks, issues such as trading rules, account opening procedures, and account types often become barriers to entry. This guide will comprehensively analyze the core elements of US stock investment.

Understanding the Basic Operating Mechanisms of US Stock Trading

To invest in US stocks, first understand the rules governing the US stock market. The US stock market consists of three main exchanges: the New York Stock Exchange (NYSE), the NASDAQ Stock Market (NASDAQ), and the American Stock Exchange (AMEX).

Trading hours: The standard trading hours for US stocks are Monday to Friday, 9:30 AM to 4:00 PM Eastern Daylight Time (EDT), and 10:30 AM to 5:00 PM Eastern Standard Time (EST). It is important to note that US stocks also offer pre-market trading (4:00-9:30/5:00-10:30) and after-hours trading (4:00-8:00/5:00-9:00). For investors in other time zones, converting to Eastern Time is a necessary preparation.

Trading system: US stocks operate on a T+0 system, meaning stocks bought on the same day can be sold on the same day, offering liquidity far superior to many other markets. Settlement follows a T+2 model, so proceeds from sales are settled two business days after the trade. The trading currency is USD, with a minimum trading unit of 1 share, which is a significant advantage over other markets.

Fee structure: US stock trading fees are relatively transparent, with manual trades costing about 1%, and electronic trades between 0.5% and 1%. Additionally, there are no daily price limit restrictions, but circuit breakers are in place to prevent extreme volatility.

Choosing the Right US Stock Account Type

Account opening capital requirements vary depending on the account type and broker, but generally, US brokers offer two main account options for individual investors.

Cash account: The most basic option, relatively simple to operate. This account allows trading stocks and ETFs but does not support short selling. Stock trading follows the T+0 mechanism, with settlement in T+3. The account opening threshold is low, usually around $500. If you are a conservative investor who only wants to go long, a cash account is a good starting point.

Margin account: Offers more flexibility, allowing investors to borrow funds from the broker for margin trading. This account supports T+0 trading and allows both long and short positions, covering stocks and ETFs. The typical minimum deposit is over $2,000. The main advantage of a margin account is leveraging to amplify investment returns, but it also increases risk proportionally.

CFD (Contract for Difference) account: A popular new option in recent years. By opening a professional online account, trading thresholds are very low, with minimums as small as 0.01 lots, and margin requirements of only $50-100. This method also supports leveraged trading of US stocks, especially suitable for short-term traders and investors employing advanced trading strategies.

Why US Stock Investment Attracts Global Investors

Lower investment threshold: One of the most prominent advantages of US stocks. Unlike most markets, US stocks have no minimum lot size restrictions; trading can be done with just 1 share. For example, Tesla (TSLA) can be bought for only $260.48 for 1 share. In contrast, the Malaysian stock market requires a minimum purchase of 100 shares (1 lot), Taiwan’s stock market requires 1,000 shares (1 sheet), Hong Kong stocks require 100-1,000 shares (1 lot), and A-shares also require 100 shares (1 lot). This makes US stocks an ideal choice for small investors entering the stock market.

Wide selection: The US market offers over 8,000 stocks, far exceeding the options available in other countries. Many internationally renowned companies like Alibaba, JD.com, and TSMC choose to list in the US because it is the most liquid financial market globally, enabling access to larger capital support.

Outstanding technological innovation: NASDAQ, as the main hub for tech stocks worldwide, hosts giants like Apple, Amazon, Google, and Tesla. Many startups with growth potential also choose to list on NASDAQ, providing investors with opportunities to participate in the global innovation wave.

Market depth and liquidity: The US stock market’s daily trading volume often exceeds 10 billion shares, attracting broad participation from global investors. The large trading volume means a very low possibility of market manipulation, which many smaller markets cannot match.

Robust economic fundamentals: As the world’s largest economy, the US has a large population and highly active markets. This ensures that US-listed companies generally have stable operational foundations and long-term growth potential.

Notable US Stock Investment Targets

For beginners investing in US stocks, focus on companies with long-term growth potential or stable profitability. Here are some representative investment options:

Apple (AAPL): A leading global technology consumer electronics company, with product lines including smartphones, computers, and wearables.

NVIDIA (NVDA): A global leader in programmable graphics processing technology, recently becoming one of the hottest stocks in tech.

Johnson & Johnson (JNJ): An American healthcare products, medical devices, and pharmaceuticals manufacturer, with over 250 subsidiaries and products sold in more than 170 countries.

Microsoft (MSFT): A multinational tech company known for Windows OS, Office software, and Xbox gaming.

Procter & Gamble (PG): One of the world’s largest consumer goods producers, ranked among the most reputable companies in Fortune 500.

Intel (INTC): The world’s largest semiconductor manufacturer, with over 50 years of product innovation history.

Amazon (AMZN): A global leader in e-commerce and cloud computing.

Alibaba (BABA): A Chinese e-commerce giant with platforms like Taobao, Tmall, and Alipay.

Walmart (WMT): The world’s largest retailer, with extensive retail networks worldwide.

Starbucks (SBUX): A leading global coffeehouse chain.

Comparing the Three Main US Stock Investment Methods

Method 1: Direct Purchase of US Stocks

This is the most straightforward way to invest in US stocks, where investors buy actual shares and become actual shareholders of the company. The US market hosts many high-quality companies with reasonable valuations and generous dividends, providing attractive returns.

Advantages: The T+0 trading system allows same-day buying and selling, greatly enhancing liquidity and opportunity capture. Transaction costs are very low, with minimal additional fees beyond broker commissions. For most investors, gains from stock trading are not subject to capital gains tax, further increasing investment appeal.

Disadvantages: Due to time zone differences, short-term traders may need to stay up late to monitor the market, which could impact health. Additionally, opening a real US stock account involves relatively complex procedures.

How to buy: Investors can trade US stocks through licensed international brokerage platforms. Different regions have different channels, so choose compliant trading platforms based on your country. Note that while capital gains are tax-free, dividend income is subject to a 30% withholding tax. Also, US stock assets may involve estate tax issues upon the investor’s death.

Method 2: Investing in US Stock ETFs

Exchange-Traded Funds (ETFs) are a type of mutual fund traded on stock exchanges. The US market offers a rich variety of ETFs, including tech ETFs, healthcare ETFs, gold ETFs, bond ETFs, and more. Investing via ETFs allows risk diversification and avoids the uncertainties of individual stocks.

Cost advantages: US stock ETFs have very low management fees; for example, some popular ETFs charge only 0.04%, far lower than similar products in other markets. This is due to the large scale of US funds, which reduces fixed operational costs.

Investment benefits: ETFs tend to have lower risk, and investors do not need to spend much time screening stocks or monitoring the market.

Caution: Even within the same sector, different ETFs may have significant differences in investment scope, requiring thorough research. Like stocks, ETF trading also involves spread risk, especially during the first half-hour after market open.

Method 3: CFD Trading of US Stocks

Contracts for Difference (CFDs) are financial derivatives based on US stock prices. Investors trade based on price movements without owning the actual stocks. The main feature of CFDs is the use of leverage.

Core advantages: Leverage allows investors to use a small margin to achieve excess returns. CFDs support T+0 two-way trading, enabling both long and short positions, making them especially suitable for short-term traders. As derivatives, theoretically any asset with price fluctuations can be traded; a single account can trade US stocks, forex, metals, indices, and cryptocurrencies.

Risk warning: Using leverage significantly amplifies investment risks. Investors must carefully assess their risk tolerance when opening positions; improper use of leverage can lead to severe losses.

Trading method: Investors can trade CFDs through regulated professional trading platforms. These platforms typically offer mobile and desktop apps, supporting quick registration and demo trading.

Summary Comparison of the Three Methods

From the table, it is clear that CFD trading of US stocks features operational convenience and the lowest entry barrier, with the biggest advantage being flexible leverage, allowing trading with minimal margin. However, leverage also entails significant risks, and improper use can cause substantial losses.

Therefore, if you are a small-cap investor seeking to amplify returns through leverage and have a certain risk tolerance, CFDs may be a suitable choice.

Recommendations for Starting Your US Stock Investment Journey

Success in US stock investing requires long-term knowledge accumulation and practical experience. Just as Warren Buffett has been able to navigate financial markets skillfully, it is because he has experienced multiple financial crises and accumulated rich coping strategies.

Hence, novice investors should not seek quick profits. It is essential to build a solid theoretical foundation, learn the basic principles and analysis methods of US stock investing, and continuously accumulate experience through practice to optimize strategies. Only by combining theory and practice can you achieve steady profits in the US stock market and become a true long-term winner.