US stock trading
Did you know that the two largest stock exchanges in the world are located in the United States? The New York Stock Exchange and the NASDAQ Stock Exchange are home to some of the world’s most famous companies such as Apple, Amazon, and Tesla. This article will cover how to trade the US stock market, including how to trade US stocks and indices, when the stock market opens and how to access the latest analytical tools to help make sound decisions.
What is the US stock market?
The first step in learning how to trade the US market is to understand what it is. The American stock market is basically a place where investors buy and sell shares of publicly listed companies, and it is run by two of the largest stock exchanges in the world: the New York Stock Exchange and the NASDAQ.
The total value of the US stock market fluctuates every day depending on how much buying and selling takes place. According to the Intercontinental Stock Exchange, which bought the New York Stock Exchange in 2013, the total value of the US stock market on the New York Stock Exchange on January 31, 2018 was more than $30 trillion. This was calculated using US stock market data from all thousands of publicly listed companies.
What is the US stock market index?
If you want to learn how to trade the US stock market, another common term to know is “index”. Because there are a variety of companies from different types of sectors listed on the US stock market, exchanges have created a selection of US stock market indices to help economists, fund managers, journalists, traders, and investors gauge just a portion of the market. The following US indices, for example, are the three largest and most popular US stock market indices, each with a specific area of focus:
S&P 500 Index: This index measures the value of the 500 largest companies listed on the New York Stock Exchange and is considered the best representation of the US stock market in general.
Nasdaq 100 Index: This index measures the value of the 100 largest companies listed on the Nasdaq Stock Exchange. While this index includes companies from various industries, it is often considered the index that best represents the technology sector.
Dow Jones 30 Index: Developed to track the performance of the US stock market in 1896, this index includes stocks from 30 companies that reflect the dominant sectors that help the US economy. Over time some companies go out of business and others are promoted. As of mid-2019, some of the Dow Jones 30 companies include American Express, Apple, Boeing, Coca-Cola, Disney, Goldman Sachs, McDonald’s, Microsoft, Nike, Verizon, and more.
Let’s now take a look at how the US stock market trades, and how to access and read data about it.
How to trade US stocks online
If you want to learn how to trade US stocks, the first thing you need to know is the trading tools:
1- Find a suitable broker
If you want to trade in the US market and buy shares in a certain company like Facebook, you need to find someone to buy them from. This is what the broker will do for you.
The broker will direct your buy and sell orders to other buyers and sellers through its connection to the stock exchange that displays the shares of the company you wish to trade. This is an essential step in learning how to trade US stocks.
With the right broker, you can buy and sell shares in the US stock market in seconds without ever meeting the person on the other side. Remember that your capital will be held by the broker so make sure you choose the right broker when learning how to trade US stocks.
2- Choose a good trading platform
A good trading platform will help you to access the important information you need to trade US stocks including news, charts and share prices belonging to various listed companies.
Some platforms with advanced technologies allow you to have your own charting platform and brokerage platform in one place, and may allow you to trade both the US stock market, as well as a variety of other markets such as futures and indices in the US stock market , commodities, foreign exchange, and other international stocks.
3- Maintain a certain routine
Maintaining a routine of analyzing the US stock market can help you make higher quality trading decisions. The first step towards establishing this routine is knowing what US stock market hours you can trade.
US stock market opening and closing times
American stock markets are located in New York: the New York Stock Exchange on Wall Street and the NASDAQ Stock Exchange in Times Square. Both open at 9:30 AM and close at 4:00 PM New York time (Eastern Time) Monday through Friday.
The opening and closing times of the US stock market are in Saudi time
The market opens after 10:00 AM and closes after 3:10 PM KSA. The annual official holidays in the Kingdom of Saudi Arabia are: the anniversary of the founding of the Saudi state on February 22, the National Day of the Kingdom of Saudi Arabia on September 23, Eid al-Fitr and Eid al-Adha.
Once you have opened a trading account and established the right routine for you, you need to move on to the next step which is to make decisions about which stocks to buy or sell. To have successful and profitable trades, you need to be aware of what affects US stock prices so that you can decide which ones are worth investing your money in.
What affects US stock market prices?
There are a variety of factors that affect US stock prices:
1- The economy
Stock markets in the United States of America generally move upwards during periods of economic growth that ensures increased job opportunities, consumer spending, and more profits for companies that push investors to buy more shares, which in turn helps push the stock market in general to the upside. Investors pay close attention to economic data such as:
Retail sales and consumer spending…
When learning how to trade the US stock market, keep in mind that investors always make their decisions based on a particular trend among many different economic indicators rather than on a single point of good or bad economic data.
If unemployment starts to rise and retail sales numbers start to fall for example, that could translate into less spending, which could affect the company’s profits. This may cause some investors to exit to reinvest their money elsewhere, which will affect the general trend of the stock market in general.
The second point to consider when learning how to trade US stocks is the impact of politics on the markets. Because the US government sets tax policies and controls public spending and immigration, politics can have a significant impact on trading in the US stock market.
The impact of politics on the stock market in the United States of America appears significantly during the election season, when big stock market news is released to the public, which influences its view of the market.
Politics also influences government policies and central banks’ decisions regarding interest rate policy which can have a significant impact on businesses, given their association with borrowing costs which can affect profit margins.
On the NASDAQ 100 chart shown above, you can clearly see the long-term trend that has emerged since the 2008 financial recession. The uptrend was accelerated during the pandemic as governments and central banks employed policies to provide liquidity to the stock market that helped it soar to new highs.
However, political events at the beginning of 2022, such as the conflict between Russia and Ukraine and the Federal Reserve’s increase in interest rates, led to a significant decrease in the index. Events like these affect the way traders invest in the US stock market, trading in such turbulent times can be challenging for many traders.
This is why it is so important to have access to correct and effective trading products such as CFDs, which allow traders to potentially profit from rising and falling markets by “shorting stocks”. CFDs offer leverage that doubles your potential profits and even your losses if things go wrong.
During good economic times when the US stock market is rising, many traders buy stocks and hold them for a longer period of time. One of the advantages of this trading strategy is receiving a regular portion of the company’s profits via dividends on top of the potential share price appreciation.
Disclaimer: The content of this article is for informational purposes only. The information provided should absolutely not be considered as an investment advice or recommendation. There is no express or implied warranty as to the accuracy of the information or data contained herein. Users of this article agree that Money Secrets does not accept responsibility for any of their investment decisions. Not every investment or trading strategy is suitable for anyone. See the risk warning statement.