How to Buy US Stocks? A Practical Guide from Zero to Your First Trade

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Allocating assets to global markets is an effective way to achieve diversification. You may have noticed that investing in US stocks is becoming a global trend. Data shows that international investors hold nearly 30% of total market capitalization in US stocks, reaching a historical high. This indicates that global capital is continuously flowing into this market. This guide will provide you with a clear path to help you start from zero and easily complete your first trade.

Key Highlights

• You can buy US stocks through overseas brokers or sub-account services provided by mainland Chinese brokers.
• Opening an account requires preparing a passport and proof of address, then filling out an online application form.
• You can deposit funds into your US stock account via international wire transfer.
• Choose stocks from companies you are familiar with and use limit orders to control the purchase price.
• US stock trading has no “lot” restrictions; you can buy just 1 share.

Choosing a US Stock Account Opening Method

The first step to starting US stock investing is selecting an account opening channel that suits you. Currently, there are two main methods: directly opening an account with an overseas online broker or using sub-account services provided by mainland Chinese brokers. These two methods have their own advantages and disadvantages; you need to decide based on your situation.

Advantages and Disadvantages of Overseas Brokers

Directly choosing an overseas broker is the preferred option for many investors.

• Advantages:
  • Low Trading Costs: Many overseas brokers offer zero-commission trading, effectively reducing your investment costs.
  • Rich Investment Options: You can directly trade almost all stocks, ETFs, and other financial products listed in the US.
  • Powerful Features: Trading software is usually fully featured, providing strong support for analysis and trading.
• Disadvantages:
  • Slightly Complex Deposit Process: You need to use bank international wire transfers to deposit funds into the account.
  • Differences in Customer Service: Although most provide Chinese language support, communication efficiency and methods may differ from your habits.

Advantages and Disadvantages of Mainland Chinese Broker Sub-Accounts

Sub-account refers to delegating your mainland Chinese broker account to place orders with their overseas partner brokers.

• Advantages:
  • Convenient Operation: You can complete all operations within the familiar broker app, with relatively simple fund transfers.
  • Localized Service: You can directly contact your client manager with no communication barriers.
• Disadvantages:
  • Higher Overall Costs: This convenience usually comes with higher costs. Brokers bundle trade execution, account custody, and other services, which may lead to higher fees. Sometimes, trading through non-primary brokers may incur additional “transfer fees”.
  • Limited Choices: The variety of tradable stocks may not be as extensive as directly opening an account with an overseas broker.

Making a Choice Based on Needs

So, how should you choose? You can decide based on the factors you value most.

Core Trade-Off: Cost vs Convenience If you pursue lower trading costs and richer investment options and do not mind spending some time handling international remittances, overseas brokers are the more cost-effective choice. If you prioritize operational convenience and want to use your existing account system, and are willing to pay higher fees for it, then sub-account services can get you started faster.

For most beginners planning long-term investment, spending a little time researching and opening an overseas broker account will be more advantageous in the long run.

Completing US Stock Account Opening and Deposit

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Once you have selected a broker, you enter the practical operation stage. This process is simpler than you imagine, mainly divided into three steps: preparing materials, online application, and depositing funds. Below, we will guide you step by step.

Preparing Required Materials for Account Opening

Before starting the online application, preparing the required documents in advance will make the entire process smoother. As a non-US resident, you usually need to provide the following two types of documents:

• Identity Proof: The most commonly used is your valid passport. Please ensure the passport is within its validity period and prepare clear color scans or photos.
• Proof of Address: This document is used to prove your residential address. You can use recent bank statements, utility bills, or a valid driver’s license. The name on the document must match the name on your passport, and the address must be your permanent residence address.

Additionally, depending on the broker’s requirements, you may also need to provide:

• Employer information or proof of employment.
• W-8BEN form information (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting). You do not need to prepare this in advance; this form will be filled as an electronic questionnaire during the online account opening process. It is mainly used to declare your non-US tax resident status to enjoy corresponding tax benefits.

Detailed Online Account Opening Process

Most overseas brokers provide fully Chinese online account opening interfaces, with very intuitive operations. We take the beginner-friendly Firstrade as an example to show you the general process:

1. Visit the Official Website and Fill Out the Online Application Form: You need to sequentially fill in personal information, contact details, employment status, and investment experience as prompted. All information must be filled truthfully using pinyin or English.
2. Upload Identity Proof Documents: During the application process, the system will require you to upload the prepared passport scans or photos.
3. Submit Application and Await Review: After completing all information filling and document uploads, submit the application. The broker will review your materials.

Important Tip: Choosing Account Type When filling in investment experience or account purpose, you will usually see an option about “professional”. Be sure to select personal use, non-professional trader. If you are classified as a professional (for example, you are a registered investment advisor or work in a financial institution), the broker may charge you monthly market data fees of tens or even hundreds of dollars. For the vast majority of individual investors, you are not a professional.

Review time varies depending on the broker and applicant situation. If your materials are clear and complete, approval may be as fast as 3 business days. If additional verification is needed, approval time may extend to 1-3 weeks. After account approval, you will receive a confirmation email containing your account information.

Account Deposit Operation Guide

After account approval, the final step is to deposit funds into your broker account. For investors in mainland China, the most mainstream method is international wire transfer. If you happen to have a US bank account, ACH transfer is a more convenient choice.

Method One: International Wire Transfer

This is the most universal deposit method. You need to wire funds cross-border from your bank account to the broker’s designated receiving bank account.

Operation Steps Are Roughly as Follows:

1. Obtain Broker Recipient Information: Log into your US stock broker account and find the wire transfer deposit guide on the “deposit” or “transfer” page. This will detail the recipient bank name, address, SWIFT code, ABA number, and your exclusive broker account number.
2. Go to the Bank to Handle the Transfer: You can handle it via mobile banking app, online banking, or at a bank counter. You need to provide the bank with all recipient information obtained in the first step.
3. Fill in Transfer Reference: When transferring, be sure to accurately fill in your broker account number and name (pinyin) in the reference or note section. This is key to ensuring funds are correctly deposited into your account.
4. Wait for Funds to Arrive: After completing the transfer, keep the transfer voucher.

International wire transfers usually take 3-5 business days to arrive. Regarding fees, you need to understand the following:

Method Two: ACH Electronic Transfer

If you happen to have a US bank account (for example, opened by a compliant US bank for you), ACH transfer is strongly recommended. It is usually free and arrives faster.

Operation Steps Are Roughly as Follows:

1. Link Bank Account: On the broker platform’s “deposit/transfer” page, select ACH electronic transfer and add your US bank account information (account name, routing number, and account number).
2. Verify Account: To confirm the bank account belongs to you, the broker will send two small deposits (usually less than $1.00) to your bank account.
3. Confirm Verification Amounts: After 1-2 business days, log into your online banking to view the amounts of these two deposits, then return to the broker platform and enter these two numbers to complete verification.
4. Initiate Transfer: After successful verification, you can anytime “pull” funds for free from the linked bank account to your US stock account via the broker platform.

Note: The bank account name used for ACH transfer must exactly match your broker account name and must be a regular checking or savings account; third-party payment platforms are not supported.

After completing the deposit, your account has its first “ammunition.” Congratulations, you are just one step away from buying your first stock!

Practical Exercise for Buying Your First US Stock

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With funds in your account, you reach the most exciting part: buying your first stock. This process is not complicated, but you need to understand some basic concepts and operation steps. This section will guide you from selecting stocks to completing the trade step by step.

How to Select Your First Stock

Facing thousands of listed companies, deciding which one to buy seems like the biggest challenge. As a beginner, a simple and effective strategy is to start with companies you know and like. Think about the products or services you use every day, such as the iPhone in your hand (Apple Inc., AAPL), the Windows system on your computer (Microsoft Corp., MSFT), or the cola you often drink (Coca-Cola, KO).

These reputable, financially stable companies leading in their industries are often called blue-chip stocks. They are important components of core indices like the Dow Jones Industrial Average and S&P 500. With long-term stable earnings records, many investors see them as reliable starting points. During economic slowdowns, these companies’ strong balance sheets and management capabilities often help them weather crises safely.

Of course, familiarity alone is not enough. You need to conduct some basic research. You can follow these steps:

• Evaluate Company Financial Reports: Read the company’s recent annual and quarterly reports to understand its performance.
• Analyze Historical Performance: Observe the company’s stock price trends and dividend payments over the past few years.
• Conduct Horizontal Comparison: Compare several companies you favor to assess which one better matches your investment goals.

When comparing companies, some key financial metrics can provide deeper insights. But note that do not rely solely on the price-to-earnings ratio (P/E Ratio). P/E is based on past earnings, ignoring debt and future potential, sometimes misleading. In contrast, the cash flow statement better reveals the true health of company finances.

Let’s take two tech giants as examples to see how to compare using a few simple metrics:

Simple Interpretation

• Microsoft earns more profit per sale (higher return on sales).
• Apple is better at using assets to generate revenue (higher asset turnover and return on assets).

This shows the two companies have different operational advantages. As an investor, you can decide based on whether you value profit efficiency or asset utilization efficiency more.

Understanding the Broker App Trading Interface

Modern broker apps are designed to be very user-friendly with clear main functional areas. No matter which broker you use, you will usually see the following core sections:

• Watchlist This is your personal stock monitoring list. You can add interested company ticker symbols to track their price changes in real time. You can also create multiple lists, such as “tech stocks,” “consumer stocks,” etc., for easy categorization.
• Portfolio This shows all assets you currently hold. You can clearly see real-time gains/losses, holding value, cost basis for each investment, and the total account value. It also displays your buying power, which is the cash balance available for trading.
• Search and Order Placement This is where you find stocks and execute trades.

How to Find a Stock? You can enter the company name (such as “Apple”) or its unique ticker symbol (such as “AAPL”) in the app’s search box. The system will immediately display the stock’s real-time quote and related information. Adding it to your watchlist allows you to view it anytime.

Market Orders vs Limit Orders Explained

Before clicking the “buy” button, you must understand the two most basic order types: market orders and limit orders. Your choice will directly affect the execution price of the trade.

Beginner Tip: When to Use Limit Orders? When you want to buy at a specific price or avoid buying at an unexpected high price during volatile markets, limit orders are the safer choice. They ensure your trading costs are controllable. Although the order may not execute immediately or may not execute at all if the price is not reached, this avoids the risk of chasing high in fast-changing prices. When obtaining a specific price is more important than immediate execution, limit orders are more beneficial for you.

Order Placement and Buying Exercise

Now, you have selected the stock and understand order types. Let’s complete your first US stock trade.

Operation Steps Are as Follows:

1. Find the Trading Entrance: In your broker app, find the stock you want to buy (e.g., Apple, AAPL), then click the “trade” or “buy” button.
2. Fill in Order Information:
   • Order Type: Choose “market order” or “limit order”. For your first trade, consider using a limit order to control costs.
   • Quantity: Enter the number of shares you want to buy.
   • Price: If you choose a limit order, enter the maximum price you are willing to pay. For example, if the current price is $170.50, you can set a $170.00 limit, meaning your order will only execute when the price falls to or below $170.00.
3. Preview Order: Before submitting, the system will display an order preview page. Carefully check the ticker symbol, order type, quantity, price, and estimated total cost.
4. Submit Order: After confirming no errors, click the “submit order” button.

How to Confirm If the Order Executed?

After submitting the order, you can confirm its status in the following ways:

• ViewOrder Status Page: In the app’s “orders” or “activity” section, you can see all pending and completed orders. If the order status shows “filled,” the trade was successful.
• Check Your Portfolio: After successful purchase, this stock will appear in your portfolio list.
• Watch for Email Notifications: Brokers usually send a trade confirmation email after order execution.

Congratulations! You have successfully bought your first stock and officially started your global investment journey.

Understanding Key US Stock Trading Rules

After successfully buying a stock, you also need to understand some basic rules of the US stock market. These rules will affect your trading strategy and final returns. Familiarizing yourself with them will help you invest more steadily.

Trading Hours and Units

US stock trading hours differ from mainland China and are based on US Eastern Time (ET). You need to pay attention to daylight saving time changes. Outside regular trading hours, there are pre-market and after-hours trading sessions, but these sessions have lower volume and potentially larger price swings.

Trading Unit Tip Unlike A-shares, US stock trading has no “lot” requirement of 100 shares minimum. You can buy just 1 share, providing great flexibility for small-capital investors.

Trading Fees and Tax Issues

Trading costs mainly include commissions and taxes. Although many brokers offer zero-commission trading, you may have already paid bank wire fees and currency conversion fees during deposit. To optimize this part of costs, you can consider using tools like Biyapay to manage funds and reduce potential losses from exchange rate conversions.

On taxes, for non-US resident investors, the situation is relatively simple:

• Capital Gains Tax: As long as you stay in the US for no more than 183 days in a tax year and investment gains are not related to US business, capital gains from selling stocks usually do not require US tax payment.
• Dividend Tax: Dividends distributed by listed companies require tax payment.

T+0 Trading System Explanation

You may have heard that US stocks allow “T+0” trading, meaning stocks bought on the same day can be sold the same day. This understanding is basically correct, but there is an important rule you need to know: Pattern Day Trader (PDT) Rule.

This rule states that if your margin account conducts 4 or more day trades (buying and selling the same stock on the same day) within [consecutive 5 business days], your account will be flagged as PDT.

Key to PDT Rule Once flagged as PDT, you must maintain at least $25,000 net worth in your account to continue day trading. If your account balance falls below this threshold, your trading privileges will be restricted until you deposit sufficient funds.

For beginners, the simplest strategy is to avoid frequent day trading or use a cash account for trading, as cash accounts are not subject to PDT rules.

Congratulations, you have mastered the complete path to buying US stocks. The entire process can be summarized into three core steps: choose the right channel, complete account opening and deposit, execute the first trade. Please set clear investment goals and maintain patience; this is key to long-term investment success.

Start Your Investment Journey Investing in US stocks is entirely feasible. You can start with small funds and some well-known companies or index funds, steadily taking the first step. For example:

• Apple (AAPL): Global leading tech company.
• Coca-Cola (KO): Stable consumer brand.
• Vanguard S&P 500 ETF (VOO): Invest in 500 leading US companies at once.

Now, use your new knowledge to steadily start your global investment journey!

FAQ

How much money do I need to invest in US stocks?

US stock trading has no minimum fund requirement. You can buy just 1 share, and many brokers even offer fractional shares, allowing you to invest with just a few dollars. Your starting capital entirely depends on your personal budget and investment goals.

Is my money safe with overseas brokers?

Account Safety is Protected Legitimate US brokers are protected by the Securities Investor Protection Corporation (SIPC). If the broker goes bankrupt, your account will receive up to $500,000 protection, including up to $250,000 in cash. This provides important security for your investments.

Do I need to file taxes with the US?

As a non-US resident, capital gains from selling stocks usually do not require US tax filing. You only need to fill out the W-8BEN form during account opening to declare your status. Dividend income tax will be withheld directly by the broker; you do not need to file yourself.

Besides individual stocks, are there other options?

Of course. You can consider investing in exchange-traded funds (ETFs). For example, investing in the S&P 500 index ETF (such as VOO) is equivalent to buying 500 leading US companies at once, effectively diversifying risk and very suitable for beginners.