Investing in US Stocks Is Not Difficult At All: A Comprehensive Beginner's Guide to US Stock Exchanges

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Do you also feel that investing in US stocks and understanding the rules of US exchanges sounds like an unattainable challenge? Do the technical terms in the news make you anxious and unsure where to start?

Don’t worry – this journey is much simpler than you think! Investing in US stocks is not difficult at all. This handbook will be your most reliable guide, taking you from zero and walking you step by step into the world of investing.

Key Takeaways

• Before investing in US stocks, first set clear goals, cultivate a long-term perspective, and accept market volatility.
• Investing in US stocks has three major advantages: access to the world’s top companies, huge market size with high liquidity, and the ability to invest with just one share.
• The US stock market has three major indices (Dow Jones, S&P 500, Nasdaq) and three major exchanges (NYSE, Nasdaq, AMEX).
• US stock trading rules include trading hours, one-share minimum, no daily price limits (but circuit breakers exist), T+1 settlement, and dividend tax.
• Beginners can start by investing in broad-market ETFs or familiar, stable blue-chip stocks.

Before Investing in US Stocks: Build the Right Investment Mindset First

Before diving into the rules and details of US exchanges, the most important step is to establish a solid investment mindset. This is like laying a strong foundation before building a house – the right mindset will help you stay steady through market ups and downs and make rational decisions.

Set Your Investment Goals

First, ask yourself the most fundamental question: Why do you want to invest? A clear goal will serve as your compass on the investment journey. Your goals might be:

• Preparing for retirement in ten years
• Saving an education fund for your children
• Hoping to buy your own house in five years
• Pursuing financial independence to enjoy life earlier

Clear goals help you determine your investment strategy and risk tolerance. Investing without goals is like sailing on the ocean with no destination – you’ll easily get lost.

Cultivate a Long-Term Investment Perspective

Investing in US stocks is not a get-rich-quick gamble; it’s a marathon that requires patience. Many of the world’s top companies, such as Apple (AAPL) or Microsoft, took decades of growth to reach their current scale. When you invest in these companies, you should also focus on their long-term growth potential.

Historical experience tells us that even after severe market crashes, long-term holding with dividend reinvestment will eventually recover. For example, after the dot-com bubble burst in 2000, the market took about 5 years to recover; after the 1987 crash, it took about 23 months to return to previous highs.

Accept Normal Market Volatility

Stock prices fluctuate up and down every day – this is completely normal. The most common mistake beginners make is panic-selling during a downturn and missing the subsequent rebound. Remember, short-term declines are part of the investment process.

Historical data shows that market declines are routine, but recoveries are inevitable. The chart below clearly shows the average recovery time after different degrees of market drops.

When you understand that volatility is part of the market and stay focused on your long-term goals, you can view short-term fluctuations more calmly and avoid impulsive decisions.

Why Invest in US Stocks? Analysis of the Three Core Advantages

After establishing a solid investment mindset, you may wonder why everyone is talking about investing in US stocks. What makes the US market so attractive compared to others? Next, we’ll break down the three core advantages of investing in US stocks so you can see why it’s an ideal starting point for beginners.

Advantage 1: Invest in Global Leading Companies

When you invest in US stocks, you’re not just buying shares – you’re becoming a shareholder in the world’s top enterprises. Their products and services are already deeply integrated into your daily life.

Think about it – every day you might be using:

• Apple’s iPhone
• Google’s search engine
• Eating at McDonald’s
• Drinking Coca-Cola

Investing in US stocks allows you to directly participate in the growth of these world-class companies and share in the profits they earn globally. You’re no longer just a consumer – you’re a participant in their business success.

Advantage 2: Huge Market Size and High Liquidity

The US stock market is the largest and most active financial market in the world. As of 2025, the combined market capitalization of companies listed on the New York Stock Exchange (NYSE) and Nasdaq alone reaches approximately $67.8 trillion. This massive scale means extremely high “liquidity” – buying and selling is very easy. Whenever you want to buy or sell, there are almost always plenty of buyers and sellers, so you can complete transactions quickly without worrying about being unable to sell your holdings.

Advantage 3: Flexible Trading Units – Invest with Just 1 Share

For beginners and small investors, one of the friendliest features of US stocks is the flexible trading unit. Unlike Taiwan stocks where the main unit is “one lot (1,000 shares)”, in the US market you can become a shareholder with just one share. This means even for high-priced stocks like Amazon or NVIDIA (NVIDIA), you can start with just one share and easily take your first step. This low barrier allows you to build a diversified portfolio with relatively little capital.

Understanding the US Stock Market: The Three Major Indices and Exchanges

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As you start exploring US stocks, you’ll constantly hear terms like “Dow Jones” and “S&P 500”. What are they? And where are stocks actually traded? This section introduces the two core components of the US stock market: market indices and exchanges. Think of indices as the “scoreboard” and exchanges as the “playing field” of the game – understanding them gives you a clear picture of the entire market.

The Three Major Indices: Dow Jones, S&P 500, and Nasdaq

Market indices are like health check reports for the stock market, tracking a basket of stocks to give you a quick view of overall market trends.

• Dow Jones Industrial Average (DJIA): One of the oldest and most well-known indices, comprising 30 large U.S. blue-chip companies. It’s like a team of top students representing the backbone of American industry. The chart below shows the highest-weighted companies in the Dow – many familiar names.
• S&P 500 Index: Covers 500 large U.S. listed companies, broader in scope and considered by many experts the most accurate gauge of the overall U.S. economy.
• Nasdaq Composite Index: Tech-heavy, comprising over 3,000 companies. If you’re interested in Apple, Google, Amazon, etc., the Nasdaq is the index to watch.

The Three Major Exchanges: NYSE, Nasdaq, and AMEX

Exchanges are the “markets” where stocks are bought and sold. Companies list here, and investors trade through brokers. There are three main U.S. exchanges:

• New York Stock Exchange (NYSE): The oldest and largest, home to many traditional industry giants like Coca-Cola, Boeing, etc.
• Nasdaq Stock Market: The world’s first electronic stock market, famous for tech and growth companies – the preferred listing venue for many high-growth firms.
• American Stock Exchange (AMEX): Now part of the NYSE group, mainly trading small- and mid-cap stocks and ETFs.

The two primary U.S. exchanges have different listing requirements for companies wanting to go public.

Essential US Stock Trading Rules Every Beginner Must Know

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Congratulations! You now have a basic understanding of the US stock market. Now let’s learn the practical “rules of the game” you need for real trading. Understanding these rules is as important as knowing traffic signals before driving – they help you invest more steadily and safely. These rules differ from Taiwan’s market, but don’t worry – they’re all very intuitive.

US Stock Trading Hours & Pre/After-Hours Trading

First, you need to know the opening hours of U.S. exchanges. Due to time zone differences and daylight saving time, the corresponding times in Taiwan vary.

Regular U.S. trading hours are Monday to Friday, 9:30 AM – 4:00 PM Eastern Time (ET).

Beginner Tip: The U.S. has Daylight Saving Time and Standard Time – remember to adjust your watch according to the season!

• Daylight Saving Time (approx. Mar–Nov): Taiwan time 9:30 PM – next day 4:00 AM
• Standard Time (approx. Nov–Mar): Taiwan time 10:30 PM – next day 5:00 AM

Besides regular hours, you may hear about “pre-market” and “after-hours” trading – extended sessions usually used when companies release major earnings or news.

However, pre/after-hours have lower participation and volume, leading to higher volatility and wider bid-ask spreads. Beginners are advised to stick to regular hours until they gain more experience.

Trading Unit: Become a Shareholder with Just One Share

This is one of the most beginner-friendly rules in the US market. Unlike Taiwan where the standard unit is one lot (1,000 shares), you can buy just one share in the US.

This means even for blue-chip stocks priced at hundreds of dollars, like Apple (AAPL) or Microsoft, you can start investing with a relatively low amount and gradually build your portfolio. This flexibility makes it easy for small investors to own shares in the world’s top companies.

No Daily Price Limits + Circuit Breaker Mechanism

A major feature of the US market is no daily price limits. A stock can rise or fall more than 20% in a single day. This offers higher potential returns but also higher risk – something to keep in mind.

To prevent extreme crashes, the US has a “circuit breaker” system.

Think of circuit breakers as a referee blowing the whistle for a timeout in an intense basketball game. When the market drops too sharply, trading is halted for a period to let everyone calm down and avoid panic selling.

The mechanism is based on the S&P 500 and has three levels:

T+1 Settlement

US stocks use “T+1” settlement, where “T” is the trade date.

T+1 means that when you sell stocks today, the funds are officially settled and available in your brokerage account the next trading day. However, most brokers allow you to use the “pending settlement” proceeds immediately to buy other stocks.

Tax Notes: Dividend Tax and Capital Gains

For foreign investors, taxation is important. The good news is that US tax rules for non-residents are quite favorable:

1. Dividend Tax:
   • US companies withhold 30% dividend tax on dividends paid to foreign investors.
   • The broker automatically deducts this when you receive the dividend – you don’t need to file anything yourself. That’s why you fill out Form W-8BEN during account opening to prove your non-US status.
2. Capital Gains Tax:
   • The best part! Capital gains (profit from selling stocks) are completely tax-free for non-US persons who are not US tax residents and stay in the US less than 183 days per year.
   • This is a huge benefit for long-term investors – you keep 100% of your investment profits.

How to Open an Account? Overseas Broker vs. Domestic Complex Entrusted Trading

You now understand the rules – it’s time to take action! The first step is choosing the right “account opening channel” – your ticket to trading on US exchanges. For Taiwanese investors, there are two main options: opening an account directly with an overseas broker or using domestic complex entrusted trading.

Each has pros and cons – like choosing different modes of transportation to the same destination.

Overseas Broker Pros & Cons

Overseas brokers (e.g., Firstrade, Charles Schwab, Interactive Brokers) let you open an account online directly with a US brokerage.

Advantages:

• Extremely low trading costs – many offer zero-commission for US stocks and ETFs (e.g., Schwab, IBKR).
• No minimum deposit and usually no account maintenance fees.
• Full product access – stocks, ETFs, options, futures, etc.

Disadvantages:

• Requires international wire transfer (fees + a few days delay).
• Possible language/customer service barriers (though most large brokers now offer Chinese support).

Domestic Complex Entrusted Trading Pros & Cons

You place orders through a Taiwanese broker, who then forwards (“complex entrusts”) them to their US partner.

Advantages:

• Easy fund movement – all in TWD within Taiwan.
• Full Chinese interface and support.
• Broker handles dividend tax reporting.

Disadvantages:

• Higher fees – commission + minimum charge per trade (often $1–$39.9).
• Fewer available products.

Which Should You Choose? Comparison Table

Beginner Recommendation: If you’re willing to spend a little time learning the process, overseas brokers’ low-cost advantage has a huge compounding effect long-term. If you prioritize absolute convenience, domestic complex entrusted is also a good starting point.

Cash Account vs. Margin Account

At the final step of account opening, you’ll choose between a cash account or margin account.

• Cash Account – simplest and safest. You can only trade with money you’ve deposited. Strongly recommended for all beginners.
• Margin Account – allows borrowing from the broker to trade on margin (“leverage”).

Although margin sounds like it can make money faster, the risks are enormous:

Margin Risk Warning

• Losses are magnified the same way gains are.
• You can lose more than your initial capital and owe the broker money.
• The broker can force-sell your holdings without notice if your equity falls below the maintenance margin.

In short, margin is an advanced tool – start with a cash account and grow steadily.

From Account Opening to Placing Orders: 3-Step Practical Guide

You’ve got the theory – now let’s put it into practice! Using an overseas broker as an example, here are the three simple steps from opening an account to placing your first order.

Step 1: Online Account Opening & Document Preparation

Most overseas brokers now offer full Chinese online applications – about 15 minutes with these documents:

• Passport
• Proof of address (ID card, driver’s license, or recent utility bill)
• Basic personal info (occupation, income, etc.)

Tip: You’ll need to translate your Taiwan address to English (post office provides free service). You’ll also fill out Form W-8BEN to enjoy capital gains tax exemption.

Step 2: International Wire Transfer (Deposit)

1. Log in → find “Deposit/Fund” → get the broker’s bank wire details (SWIFT code, account number, etc.).
2. Go to your Taiwan bank with ID, passbook, and seal → request “international wire transfer”.
3. Funds usually arrive in 1–3 business days.

Wire once with your planned investment amount to minimize fees.

Step 3: App Order Placement Guide

Once funded, open the broker’s app – placing orders is intuitive. The key is choosing the right order type.

Beginner Trick: Use limit orders. If a stock is $150.50, set a $150 limit buy to ensure you don’t pay more.

What Should Beginners Buy? Two Recommended Strategies

Account open, funds in – now the big question: “What should I actually buy?” Facing thousands of US stocks can be overwhelming. Here are two beginner-friendly strategies.

Strategy 1: Invest in Broad-Market ETFs

The simplest and most recommended approach for beginners is buying index ETFs.

Buying an index ETF is like buying the entire starting lineup of a championship team instead of betting on one player. One purchase gives you a basket of stocks and greatly diversifies risk.

Popular broad-market ETFs:

• VOO – tracks the S&P 500 (500 largest US companies)
• VTI – tracks the total US stock market (large to small caps)
• QQQ – tracks the Nasdaq-100 (tech-focused)

Long-term performance of major index ETFs is impressive.

Strategy 2: Start with Familiar Blue-Chip Stocks

Another great approach is to buy brands you know and love from daily life – so-called “blue-chip” stocks.

Blue-chip stocks get their name from the highest-value chips in poker. They are financially sound, industry-leading companies with stable profits and often regular dividends.

Examples you probably use every day:

• Apple (AAPL)
• Coca-Cola (KO)
• McDonald’s (MCD)

Investing in companies you understand makes it easier to assess their long-term value.

Congratulations! You’ve completed a full journey through US stock investing – from mindset to market understanding, rules, account opening, and first strategies.

The key to investing in US stocks is taking that first brave step and continuously learning to overcome fear of the unknown. Many people never start because of fear of loss – that’s the classic “loss aversion” bias. But the real risk often lies in inaction.

Now turn knowledge into action! Start small, treat investing as a life-enriching marathon, not a sprint. Your journey to financial freedom begins here.

FAQ

How much money do I need to start investing in US stocks?

The barrier is lower than you think. You can start with just one share, and most brokers have no minimum deposit. Prepare an amount you can afford to lose (e.g., $100–$300) and take the first step.

Do I have to file taxes myself for dividends?

No. The broker automatically withholds 30% dividend tax when the dividend is paid. The amount you receive is already net of tax.

Do I have to use USD?

Yes, all US stock transactions are in USD. You’ll need to convert your local currency and wire it to your brokerage account.

What if the stocks I buy keep falling?

Stay calm and remember your long-term goal.

First assess the reason for the drop. If it’s normal market volatility, long-term investors usually hold or dollar-cost average. If the company has serious negative news, re-evaluate its long-term value.