Complete Guide to Stock Trading in the US: Master Trading Mechanisms and Investment Strategies

The US stock market, as the world’s most active capital market, has daily trading volumes often exceeding 10 billion shares, attracting investors worldwide. Compared to other markets, investing in US stocks offers unique institutional advantages and a wide range of investment options. This article will interpret how to profit in the US stock market from multiple dimensions, including practical operations, investment tools, and risk management.

Comparison of the Three Major US Stock Investment Methods

There are various ways to invest in US stocks, and choosing different tools will directly impact your profit potential and risk level.

Contracts for Difference (CFD) — High Leverage, Quick Entry and Exit

CFDs are the preferred choice for investors seeking short-term gains. These financial derivatives allow investors to leverage large positions with a small amount of margin, typically requiring only $50-100, with a minimum trading size of 0.01 lots. CFD trading follows the T+0 mechanism, supporting two-way trading (long and short), with trading flexibility far exceeding traditional stock investments.

However, high leverage comes with high risk. Improper use by investors can lead to significant losses from small price fluctuations. Therefore, this method is suitable only for short-term traders with risk tolerance.

Direct Purchase of US Stocks — Stable, Long-term Holding

Buying real US stocks for long-term investment is a common choice for value investors. US stocks operate under a T+0 trading system, enabling intraday trading. More importantly, there are no lot size restrictions; you can buy starting from just 1 share, with very low transaction costs.

For example, Tesla (TSLA) stock is around $260. Investors only need $260 to buy one share. In contrast, the minimum lot size in Taiwan’s stock market is 1,000 shares, in Malaysia’s stock market 100 shares, and in China’s A-shares 100 shares—highlighting the low entry barrier advantage of US stocks. Holding actual stocks also entitles investors to dividends, providing relatively stable long-term returns.

US Stock ETFs — Diversify Risks, Save Time and Effort

ETFs (Exchange-Traded Funds) are like a basket of stocks. Investing in US stock ETFs provides exposure to multiple sectors such as technology, healthcare, and finance in one go, effectively reducing the risk associated with individual stocks.

The management fees for US stock ETFs are extremely low. For example, VOO has a management fee of only 0.04%, which is one-tenth of Taiwan’s ETF fees. For investors who do not want to spend time selecting stocks, regularly purchasing US stock ETFs is a hassle-free option.

Core Rules of US Stock Trading

To operate smoothly in the US stock market, you must first understand the trading mechanisms.

Main Exchanges and Trading Hours

US stocks are mainly traded on three major exchanges: New York Stock Exchange (NYSE), NASDAQ, and American Stock Exchange (AMEX). Standard trading hours are from 9:30 AM to 4:00 PM Eastern Time (ET) Monday to Friday (Daylight Saving Time), with Winter Time from 10:30 AM to 5:00 PM.

In addition to regular trading hours, US stocks also offer pre-market and after-hours trading. Pre-market trading is from 4:00 AM to 9:30 AM (DST) / 5:00 AM to 10:30 AM (Winter), and after-hours trading from 4:00 PM to 8:00 PM (DST) / 5:00 PM to 9:00 PM (Winter). Investors should pay attention to time zone conversions, as trading hours vary by region.

Trading System and Costs

US stocks operate under a T+0 system, allowing same-day buying and selling with ample liquidity. Settlement occurs within T+2 days, providing flexibility in fund management. The standard trading unit is 1 share, with no price limit up or down, but circuit breakers are in place to prevent extreme volatility.

Regarding trading costs, manual orders cost about 1%, electronic trading fees range from 0.5% to 1%, making overall costs relatively low. Notably, US stock investment gains are exempt from capital gains tax, a significant advantage over other markets.

Types of US Stock Accounts

Before opening a US stock account, it’s important to understand the two basic account types.

Cash Account — Suitable for Beginners

A cash account is the most basic type, allowing trading of stocks and ETFs but prohibiting short selling. The account opening threshold is usually around $500. Stocks are traded under T+0, with settlement in T+3. If you have limited funds and only want to buy and hold, this account is most suitable.

Margin Account — Suitable for Advanced Investors

A margin account essentially involves borrowing from the broker to leverage trading, with a typical minimum deposit of over $2,000. This account allows both long and short positions, supports T+0 trading, and the main advantage is the ability to amplify returns using leverage. If you want to implement more complex trading strategies, a margin account offers more flexibility.

Why US Stocks Are Worth Paying Attention To

Unparalleled Market Maturity

US stocks host the world’s top companies, including tech giants like Apple, Amazon, Microsoft, and international firms like Alibaba, JD.com, and TSMC. These companies choose to list in the US because it is the most liquid financial market globally.

Rich Stock Selection

There are over 8,000 stocks in the US, far exceeding other markets. Investors can choose blue-chip stocks in specific industries or focus on emerging growth stocks. NASDAQ is especially known for technological innovation, attracting industry leaders like Apple, Amazon, Google, and Tesla.

Ample Market Liquidity

The average daily trading volume often exceeds 10 billion shares, making market manipulation highly unlikely. In contrast, smaller markets are more susceptible to large capital control, increasing risks.

Stable Economic Fundamentals

The US is the world’s largest economy, with a vast consumer market and innovative ecosystem. Most listed companies operate stably with significant long-term growth potential. This makes US stock investments more certain compared to other markets.

Representative US Investment Products

If you decide to invest in US stocks, the following companies are common allocation choices (for reference only; adjust according to your risk tolerance):

Tech Leaders — Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Amazon (AMZN) are core holdings in the tech sector. Nvidia, with its dominance in GPUs, has become one of the hottest tech stocks in recent years.

Healthcare — Johnson & Johnson (JNJ) is a leading global healthcare company, with products sold in over 170 countries and a long history of dividends.

Consumer Retail — Walmart (WMT) is the world’s largest retailer with stable operations and strong cash flow. Starbucks (SBUX), as a global coffee chain, has stable consumer appeal.

International Companies — Alibaba (BABA) with its complete ecosystem including Taobao, Tmall, and Alipay, is growing rapidly.

Industrial Manufacturing — Intel (INTC) has a 52-year history of product innovation and is the world’s largest semiconductor company.

Daily Consumer Goods — Procter & Gamble (PG) leads the global household products market and is one of the most reputable companies in the Fortune 500.

Practical Tips for Beginners

There are no shortcuts to investing in US stocks. Warren Buffett’s success lies not only in solid theoretical knowledge but also in his experience through multiple financial storms. As a beginner, you should:

Learn First, Operate Later — Understand trading rules, account types, risk management, and other basics before rushing in.

Choose Suitable Tools — Select CFDs, actual stocks, or ETFs based on your capital, risk tolerance, and investment horizon. If funds are limited but you can handle risk, try CFD; if you prefer stable long-term growth, buying actual stocks or ETFs is better.

Control Risk Exposure — Set stop-loss points regardless of the method chosen, avoid excessive leverage, and remember that risk management is the foundation of long-term profits.

Continuously Accumulate Experience — Practice with demo accounts, refine strategies through real trading, and gradually improve your investment skills.

The US stock market is full of opportunities, but opportunities often come with risks. Only by mastering both theory and practical skills can you stand firm in a complex market environment.