Investing in US stocks | How do I buy US stocks in 2023?

 Investing in US stocks | How do I buy US stocks in 2023?

How do I buy US stocks? Investing in US stocks or the US Stock Exchange is like any other investment in other stock markets, but it is characterized by the presence of high liquidity and a great diversity in sectors. You do not have to be a US citizen to be able to invest in US stocks. However, there are some things you should know to be able to buy US stocks from anywhere in the world.

The American market is the largest stock market in the world in terms of liquidity, size, sectors and number of investors.

The following is a guide to investing in US stocks, how to buy shares in the US stock exchange, trading times, how to follow the markets, and many useful information and tips.

How to buy US stocks online

You can buy US stocks from where you are and in real time, similar to the way it is done in the actual stock markets. Yes, you can have direct access to the shares of major companies offered for trading, including the shares of Apple, Amazon, Alphabet, Microsoft, Netflix, Tesla…

It may seem confusing at first, but buying stocks is really simple. In order for you to start the exciting journey of investing in US stocks, here is how to buy stocks on the US Stock Exchange step by step:

1. Choose a broker to trade stocks online

The easiest way to be able to buy shares in the American stock market is through an online stock broker. Other options include using a full-service stock broker (high commissions), or buying shares directly from the company.

Opening an account with an online trading broker is as easy as setting up a bank account. The process requires only filling out the account opening form, and then verifying the account through proof of identity and address (sending a copy of the identity card and an invoice showing your name and address). After that, you deposit the amount that you want to charge your account, and you can choose the payment method that suits you from among the many payment methods provided by the broker.

After opening and funding your account, you can start investing in US stocks and buying your shares through the broker’s platform within minutes. If you do not know how to choose stocks and the buying process and do not know anything about trading orders.. read on.

2- Find the shares you want to buy

Once you have created and funded your trading account, it is time to pick and choose which stocks you want to invest in. The best place to start is to research companies that you already know from your experiences as a consumer.

Don’t let the torrent of data and real-time market volatility overwhelm you while doing your research. Keep the goal simple: You are looking for businesses that you want to become a part owner of. Warren Buffett famously said, “Buy a company because you want to own it, not because you want the stock to go up.” He made a great fortune for himself by following this rule.

Most online brokers also provide lessons on how to use their tools and even basic seminars on how to pick stocks.

There are several ways to choose stocks and make a buying decision by relying on:

Fundamental analysis: You can rely on yourself to start investing in the US market, from the research process to stock selection, by doing a little research on companies. Start with the company’s annual report – specifically management’s annual letter to shareholders. The letter will give you a general account of what is happening in the business and provide context for the numbers in the report. (How to choose an investment stock)

Recommendations: Find reliable people with experience in the US stock market who provide recommendations and analysis of US stocks. The Internet provides a wealth of information at your fingertips about investing in US stocks and how to buy US stocks, but unfortunately, in addition to this huge amount of information and data, there is noise, chaos, intruders, as well as fraudsters who fill social media sites and forums. This, of course, is what makes it difficult for many beginners in the stock market to distinguish between wheat and wheat.

3- Select the number of shares you want to buy

You should feel absolutely no pressure to buy a certain number of stocks or fill your entire portfolio with a stock at once. Consider starting small by allocating a small amount per share (five shares max), until you have practiced investing in individual stocks and gained some knowledge and experience. Then you can enhance your investment portfolio by increasing the amounts to buy more of your shares over time.

New equity investors may also want to consider fractional shares, which is a relatively new offering from online brokers that allows you to buy a portion of a share rather than a full share. What this means is that you can invest in very expensive stocks, such as Apple and Amazon whose stock price is in the four figures. This can be useful if you have a specific amount that you want to invest – say, $500 – and you want to invest it in a company with a share price of up to a few thousand dollars.

4- Choose the appropriate market order

Do not be alarmed by all the numbers and combinations of terms that may seem somewhat complicated to you on the interface of the trading platform. You can refer to this table to understand the basic terms of online stock trading:
market orders

With a market order, you are indicating that you will buy or sell the stock at the current best available market price. Since a market order does not place any price parameters on the trade, your order will be executed instantly and in full.

Don’t be surprised if the price you pay, if you buy – or get, if you sell – is not the exact price I mentioned just seconds ago. Bid and ask prices fluctuate constantly throughout the day. That’s why market demand is best used when buying stocks that don’t see huge price swings – large, stable stocks as opposed to smaller, more volatile companies.
Good to know:

A market order is best for buy-and-hold investors, as ensuring that the deal is executed in full is more important to them than minor price differences.

– If you place an order in the “after hours” market, when the markets are closed for the day, your order will be placed at the prevailing price when the exchanges next open for trading.

Check the broker’s risk profile associated with order execution. Some low-cost brokers aggregate all clients’ trading orders to execute at once at the prevailing rate, either at the end of the trading day or at a specific time or day of the week.
selection commands

A limit order gives you more control over the price at which your trade is executed. If XYZ stock is trading at $100 a share and you think the $95 stock price is more in line with how you value the company, your limit order tells your broker to hold and only execute your order when the ask price drops to that level. On the sell side, a limit order tells your broker to sell the stock once the price rises to the level you set.

Limit orders are a good tool for investors who buy and sell shares of small companies, whose prices may fluctuate widely. They are also good for investing during periods of short-term stock market volatility or when the stock price is more important than fulfilling orders.

There are additional conditions you can place in a limit order to control how long the order will remain open before the order condition is met:

All or Nothing (AON): Execution only when the entire amount of shares you wish to trade is available at the price you specified.

Good for the Day (GFD): An order expires at the end of the trading day, even if the order has not been fully executed.

Good Until Canceled (GTC): The order remains in effect until the customer cancels it or the order expires; That is, from 60 to 120 days or more.
Good to know:

While a Limit Order guarantees the price you will receive if the order is executed, there is no guarantee that the order will be executed in whole, in part, or even at all. Limit orders are placed on a first-come, first-served basis, and only after market orders have been executed, and only if the stock remains within the specified conditions long enough for the broker to execute the trade.

Limit orders can cost investors more commissions than market orders. A limit order that cannot be fully executed at one time or within one trading day may continue to be executed during subsequent days, with transaction costs charged for each day that part of the trade is executed. If the stock never reaches your limit order level by the time it expires, the trade will not be executed.

5- Improve your stock portfolio

We hope that you have learned how to buy shares in the American Stock Exchange, and thus you have begun your journey in the world of successful investment. But if you’ve been through challenges, remember that every investor – even Warren Buffett – has gone through rough patches. The key to long-term success in investing in US stocks is to stay calm, follow your portfolio strategy, and focus on the things you can control. Market volatility is not among them. But there are a few things under your control.

Once you become familiar enough with investing in the US market and buying stocks, take the time to research other areas of the investment world. How will mutual funds play a role in your investment experience? In addition to a brokerage account, have you set up a retirement account, such as an IRA?
Understanding how to buy US stocks is a great first step, but it’s really just the beginning of your stock investment journey.
Practice investing in US stocks
How do I buy US stocks experimentally? There are demo trading accounts that enable beginners to trade with virtual money. We suggest that you take the time to learn how to invest in US stocks through the free demo account offered by your chosen broker. There is no risk on the demo account and it does not require the use of any real money.
How will starting a demo account help you?
For the novice trader: The demo account provides the opportunity for the novice trader to study the basics, to fully engage in the process in a practical way, and thus to trade effectively and continuously. Of course, you don’t need to invest your own money! Take your time to get to know the broker and practice trading, test yourself and your progress, learn and experiment with minimal risk.
For the Experienced Trader: If you are an experienced trader, the demo account is your chance to get to know this broker and pick the strength of their platforms. Trade whatever you want: currency pairs, stocks, cryptocurrencies, commodities…
Information about the American Stock Exchange
The American Stock Exchange is an inaccurate word, because it is not a single stock exchange, but several stock exchanges in several states, for example, there is the New York Stock Exchange, the Chicago Stock Exchange, the Philadelphia Stock Exchange, and other markets and stock exchanges.
There are stock exchanges in the US market that have a specific place and a specific location as we mentioned, such as the New York Stock Exchange NYSE, the Philadelphia Stock Exchange, and the Chicago Stock Exchange, and trading takes place through them in traditional, manual ways. Of course, in these stock exchanges thousands of companies are traded, and these companies are called listed companies or Listed. There are also electronic markets that are traded through a computer and an advanced electronic system such as the Nasdaq market, and they are called OTC companies.
In order to be able to separate whether the company is of the OTC type, meaning that it trades on the Nasdaq Stock Exchange or other similar electronic stock exchanges, or of the Listed type that trades on the traditional spatial stock exchanges.
For example, in the Saudi market, there is a numeric code for each company, while the American markets have a literal code.
When the symbol is 3 letters or less, this means that trading takes place in the listed spatial markets
But if it is 4 letters or more, this indicates that it is trading in electronic ways OTC (NASDAQ).
More than 50,000 companies are traded on various US stock exchanges, and there are hundreds of main and sub-sectors such as;
Industry sector: It has several sub-sectors such as construction, defense, space, electronic industries and other industries.
Oil and gas sector: It includes the production and refining sector, the petroleum equipment sector, the exploration sector, etc…
Raw materials sector: It includes the petrochemical sector, the mineral exploration sector and many others.
Technology sector: It includes programs, computers, equipment…
The financial sector: it includes the banking sector, the insurance sector, the real estate sector…
Telecommunications sector: It includes the mobile phone sector, the electricity sector,…
Stock trading times on the American Stock Exchange
Official trading on the US stock exchanges lasts 6 and a half hours. The opening time of the US market: from 9:30 am Eastern time in the United States of America, and extends until 4 pm at the same time.
This is equivalent in Saudi time as follows:
Summer (from April to the end of September): from 4:30 pm to 11:00 pm.
Winter (from October to the end of March): from 5:30 pm to 12:00 midnight.
In addition to the six and a half official hours, there are additional hours for trading called extended-hours, and if we combine them with the official hours, the total becomes 12 trading hours. However, unofficial hours are not very accurate, and it is not recommended to trade during them except for those with experience, and these hours are:
Pre-opening: from 8:00 am to 9:15 am, an hour and a half before opening.
Post-closing: Unofficial trading continues until 8:00 pm, i.e. 4 trading hours after closing.
Trading days: from Monday to Friday
Week off: Saturday + Sunday
Official holidays: There are many about 9 separate days a year, and they are announced on time.
* Note: It is strictly forbidden for the US market to be closed for more than 3 consecutive days.
Follow the US stock market
After you got to know how to buy shares in the American Stock Exchange, you will find below other information that will help you gain knowledge about how to follow the market and more information to understand the nature of the American stock exchanges:
You are supposed to know the English language so that you can read analyzes and news on companies that help you choose a specific stock or the market as a whole. You can follow market developments, news, etc. via the Internet, and there are several free sites, the most important of which are: nasdaq, marketwatch, .. and other thousands of sites.
American stock exchanges have dozens of indices, and they do not necessarily have to be for specific companies in one stock exchange, but may be an index for a stock exchange, a sector index, or a multi-sector and market index, and so on. And the index here is useful to know the direction of the economy and the direction of the market, and among the most important indicators and the most famous in the American markets:
The Dow Jones Industrial Index: It represents the 30 largest industrial companies in America, such as General Electric GE, McDonald’s restaurants MCD, IBM, Pfizer PFE and other industrial companies of various industrial sectors, which may be technological, heavy or petrochemical industries…etc.
The Nasdaq Index: It is an index that includes thousands of technology companies in various sectors.
Standard & Poor’s Index: It is an index that contains the 500 best companies in various markets, sectors and industries.
Frequently asked questions about “investing in US stocks”
How do I buy US stocks?
You can buy US stocks from where you are and in real time, similar to the way it is done in the actual stock markets. And through an online trading broker that gives you direct access to the shares of major companies offered for trading, including the shares of Apple, Amazon, Alphabet, Microsoft, Netflix, Tesla …
What are the best stocks for beginners?
There is no single “best stock,” which is why many financial advisors advocate investing in low-cost index funds. However, if you want to add a few individual stocks to your portfolio, beginners may want to consider blue-chip stocks in the S&P 500. These are among the most stable companies in the country with a proven track record of generating long-term returns for investors.
Is now the right time to buy stocks?
The truth is, you’ll never know if it’s exactly the right time to buy stocks. However, if you’re investing for the long term (say, more than five years), it may be time to buy stocks as soon as you have the money. Even if the market drops shortly after you invest, you’ll have plenty of time to recoup those losses. The only way to guarantee that you will be part of any stock market recovery or expansion from the start is to invest before the recovery begins.
How much money do I need to invest in US stocks?
If you open a brokerage account with no minimum deposit and no transaction commission, you can start investing enough to buy one share. It can be as low as $10 (cheap stocks are high risk and don’t necessarily make for good buys). Some online brokers allow you to buy fractional shares, which means if you only have $100 to invest, you can buy part shares like Amazon, which has long been trading at more than $3,000 a share. Of course, the higher the investment, the higher the potential returns in the long term.
How do I know when to sell shares?
If you’re buying stocks, you should feel comfortable not touching your money for at least five years. This is due to the volatility of the stock market – it is possible for your shares to go down in value before going up. You can consider selling your shares if you need the cash and they rise in value, but doing so means you could pay capital gains taxes on the sale, and miss out on future gains over time. Perhaps the most important thing to consider is when not to sell stocks. When the market is going down, you may be tempted to sell to prevent further losses. This is widely known as a bad strategy, as once you sell, you will be charged with the losses you incur. A better strategy is to weed out the volatility and seek long-term gains while recognizing that the market will bounce back over time.
Disclaimer: The content of this article is for informational purposes only. The information provided should absolutely not be considered as investment advice or a recommendation. No warranty is made, express or implied, 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.