Beginner's Guide to Mastering U.S. Stocks from Scratch: Essential Trading Mechanisms and Profit Strategies for Beginners

In the global financial markets, the US stock market leads in terms of maturity and liquidity. With daily trading volumes exceeding 10 billion shares, over 8,000 tradable products, and transparent institutional design, Getting Started with US Stocks has become the choice for an increasing number of investors. However, for beginners, the complexity of the US stock market should not be underestimated. This article will approach from a practical perspective to help you quickly understand the core logic of investing in US stocks.

Why choose US stocks over other markets?

Low barrier to entry for trading

This is the most intuitive advantage of US stocks. Unlike Hong Kong stocks with a minimum of 100 shares, A-shares with regulations of 100 shares, or Taiwanese stocks requiring 1,000 shares, Getting Started with US Stocks requires only 1 share at minimum. For example, Tesla’s single share price is about $260, and to reach a similar investment scale in other markets, the required capital is several times higher.

For investors with limited funds, this difference means whether they can truly participate in the market. You don’t have to be blocked out because of insufficient account funds.

Market breadth and depth

The US stock market gathers the world’s top-quality listed companies. Non-US companies like Alibaba, JD.com, and TSMC choose to list in the US because it has the strongest global capital absorption capacity. Nasdaq, as a hub for tech stocks, is home to giants like Apple, Amazon, Google, and Nvidia.

This diversity allows investors not only to participate in the growth of the US economy but also to position themselves in global tech trends.

Very low possibility of market manipulation

Markets with an average daily trading volume of over 10 billion shares make it nearly impossible for individuals or small groups to manipulate prices. In contrast, some smaller markets can be influenced by a few large funds. Transparency and fairness are core competitive advantages of US stocks.

Trading fundamentals to understand before getting started with US stocks

Trading hours and time zone conversion

US stocks are operated by major exchanges like NYSE and NASDAQ. Standard trading hours are 9:30 AM to 4:00 PM Eastern Daylight Time (EDT), and 10:30 AM to 5:00 PM Eastern Standard Time (EST). There are also pre-market trading (4:00 AM - 9:30 AM) and after-hours trading (4:00 PM - 8:00 PM).

For Asian investors, this means trading during nighttime or early morning. The time difference is a practical challenge for long-term US stock investment.

Core trading system

US stocks operate on a T+0 system, meaning that stocks bought on the same day can be sold on the same day, offering much higher liquidity than T+1 markets. US stocks have no daily price limit up or down, but they do have circuit breakers to prevent abnormal market fluctuations. Trading currency is USD, with a minimum unit of 1 share.

Funds from sales can only be withdrawn on T+2 (the second business day after the trade), which is a industry standard.

Fee structure

Trading costs for US stocks include broker commissions (about 1% for manual trading, 0.5%-1% for electronic trading) and possibly other fees. Notably, capital gains from US stock trading are generally not taxed in the US, but dividend income is subject to a 30% withholding tax.

Account choices determine your trading approach

Cash account: conservative investors’ choice

Cash accounts typically require a minimum deposit of $500. In such accounts, you buy and sell stocks and ETFs with existing funds, and short selling is not allowed. Trades follow T+0 (can be closed within the same day), but settlement takes T+3 days. Suitable for those who prefer steady investing with limited risk tolerance.

Margin account: leverage tool for active traders

Minimum requirements for margin accounts are usually above $2,000. Account holders can borrow funds from brokers to invest, allowing both long and short positions, also following T+0. Leverage can amplify gains but also risks. This type of account is suitable for experienced traders with strong risk management skills.

CFDs: the most flexible entry method

Besides the two above, Contracts for Difference (CFD) offers a third pathway. Trading US stocks via CFD means investors do not own the actual stocks but trade based on price movements. Minimum trading size is 0.01 lot, with margin requirements as low as $50-$100. This makes CFDs popular among short-term traders and those with limited capital.

Three investment routes for getting started with US stocks

Route 1: Direct purchase of real stocks

Buying real US stocks means becoming an actual shareholder. The advantage is clear asset ownership and rights, and the T+0 system allows intraday trading. Transaction costs are very low, only broker commissions, with no hidden fees.

Disadvantages include dealing with time zone differences (especially for short-term traders) and more complex account opening procedures. Entry methods vary by region:

• Taiwan investors can use local broker’s cross-entrustment services, with fees around 1%
• Malaysian investors can use platforms like M+ Global, Moomoo, with fees of $3.8-$25
• Mainland China investors can participate via Futu, WeBull, and other platforms

Route 2: Diversify risk through ETFs

ETFs are funds tracking indices or specific sectors. The US market offers a variety of options like tech ETFs, healthcare ETFs, bond ETFs, etc. Compared to individual stocks, ETFs offer more diversified risk and require less effort in stock selection.

Management fees for US ETFs are very low; for example, VOO charges only 0.04%, far below Taiwan ETF levels. This means that in long-term investing, the impact of fees on returns is minimized. ETFs are suitable for investors who believe in the long-term growth of the market and prefer passive investment strategies.

Route 3: Derivative trading via CFDs

CFDs allow investors to leverage larger positions with a small margin. Investors can go long (bullish) or short (bearish), with no restrictions on market direction. Under T+0, this creates ample opportunities for short-term traders.

However, leverage is a double-edged sword. Improper use can lead to rapid loss of principal. CFDs are suitable for experienced traders who can handle high risks, and those seeking diversified trading tools (including US stocks, forex, commodities, virtual currencies, etc.).

Common stock-picking directions for beginners

Faced with over 8,000 US stocks, beginners often feel overwhelmed. Here are some long-term recognized quality companies:

Technology sector: Apple (AAPL), Nvidia (NVDA), Microsoft (MSFT), Amazon (AMZN), representing the forefront of global technology applications.

Consumer and retail: Walmart (WMT), Starbucks (SBUX), Alibaba (BABA), benefiting from global consumption upgrades.

Pharmaceuticals and manufacturing: Johnson & Johnson (JNJ), Intel (INTC), Procter & Gamble (PG), which are defensive stocks with stable dividends.

The key to stock selection is not quantity but understanding the business model, competitive position, and long-term prospects of the companies chosen. Blind following often leads to disappointment.

From beginner to mature investor

Getting started with US stocks is easy, but becoming a true market participant requires time and experience. Warren Buffett has continued to make money over decades because he has experienced multiple financial crises, each becoming an opportunity to deepen his understanding.

Beginner investors should understand that theory and practice must go hand in hand. Start with small funds to test and learn, experiencing market volatility and validating strategies—this process is often more valuable than any textbook.

Also, recognize that investing in US stocks is not a quick way to get rich. Promises of short-term high profits often come with huge risks. A prudent investment strategy, sufficient knowledge, and strong psychological resilience are the foundation for long-term profits in the market.

Choose an investment approach that matches your risk tolerance, keep learning about market operations, and Getting Started with US Stocks will no longer be a distant goal but a plan you can gradually realize.