The basic process and rules of U.S. stock trading

The U.S. stock exchange is one of the most active stock markets in the world, with a well-developed trading system and a strict regulatory regime. In this article, we will introduce the basic process and rules of U.S. stock trading to help investors better understand and participate in the U.S. stock market.

I. Opening of Accounts

Investors who want to trade U.S. stocks first need to open an account with a brokerage firm. A brokerage firm is a financial institution that provides stock trading services. In the U.S., common brokerage firms include Charles Schwab, P&T Securities, Tiger Securities, etc.

To open an account, you will need to provide personal identification information, such as name, address, ID number, etc., as well as bank account information. The brokerage firm will audit the account, and after the audit is approved, the investor can trade.

II. Deposit and Withdrawal

Investors need to deposit funds into the brokerage account in order to trade. Deposit channels include bank transfers, credit card payments, and so on.

Withdrawal refers to the selection of funds from a brokerage account to a personal bank account. Withdrawal of funds requires the investor to submit a withdrawal request, which will be audited by the brokerage firm and transferred to the investor's designated bank account.

III. Placing Orders

Investors can place orders through the trading platform provided by the brokerage firm. Trading platforms usually provide a variety of order channels, including market orders, limit orders, stop-loss orders, and so on.

A market order is an order that is filled at the current market price. Market orders are quick to fill, but the price may not be ideal.

A limit order is an order that is filled at a price specified by the investor. Limit orders can be filled at a guaranteed price, but may be filled at a slower pace.

A stop-loss order is an order that is automatically filled when the price of a stock reaches a certain stop-loss price. Stop-loss orders help investors to limit their losses.

IV. Transaction fees

U.S. stock trading requires certain fees, including commissions, exchange fees, and transfer fees.

Commission is a trading service fee charged by brokerage firms, usually calculated as a percentage of the transaction amount.

Exchange fees are fees charged by exchanges to maintain an orderly market.

The transfer fee is a fee charged for the transfer of securities.

V. Trading Hours

U.S. stock market trading hours are Monday through Friday from 9:30 a.m. to 4:00 p.m. EST.

VI. Transaction Rules

The U.S. stock market trading rules are set by the U.S. Securities and Exchange Commission (SEC) and include the following:

Investors must conduct sufficient research to understand the risks of the stocks they are trading.

Investors are not allowed to engage in insider trading, market manipulation and other illegal activities.

Investors must comply with the broker's trading rules.

VII. Frequently Asked Questions

1. What are the taxes and fees for U.S. stock trading?

Taxes on U.S. stock transactions include capital gains tax and dividend tax. The capital gains tax is a tax on profits from stock trading and the dividend tax is a tax on stock dividends.

2. What are the risks of trading U.S. stocks?

Risks associated with U.S. equity trading include market risk, liquidity risk, credit risk and operational risk.

Market risk is the risk of falling stock prices due to general market volatility.

Liquidity risk is the risk of difficulty in trading stocks due to low trading volume.

Credit risk is the risk of not being able to repay debts due to the insolvency of the issuer.

Operational risk is the risk of loss due to an investor's operational error.

3. How to invest in U.S. stocks?

Investors can choose an appropriate investment strategy based on their risk tolerance and investment objectives. The following are some common investment strategies:

Value Investing: This is the process of analyzing the intrinsic value of a stock and buying it at a price below its intrinsic value.

Growth Investing: This refers to investing in stocks of companies with high growth potential.

Index investing: This refers to investing in index funds and investing in the entire stock market through index funds.

U.S. stock trading is a complex investment activity, investors need to fully understand the relevant knowledge and risks, and develop a reasonable investment strategy in order to get more benefits.