Step 1: What are the trading rules to understand before buying US stocks?
How many new investors want to buy US stocks, but suddenly find that the timing of US stocks has changed? Why was the launch of the market suddenly delayed by an hour?
First, let's take a look at the basic trading rules for US stocks:
US Stocks Get Started: US Stock Trading Hours
1. US Stock Market Opening Hours
U.S. stocks open at 9:00 a.m. to 4:00 p.m. on Monday through Friday. It differs from Hong Kong stocks, and U.S. stocks do not close at noon.
However, since the United States is also divided into Daylight Saving Time and Winter Time, the corresponding Hong Kong time will be different:
2. US Stocks Pre-Market Trading Hours
Pre-market trading hours for U.S. stocks are Eastern Time (ET): Monday through Friday 4:00-9:30 a.m. The corresponding Hong Kong time is:
3. US Stock Market Aftermarket Trading Hours
Post-market trading hours are Eastern Time (ET): Monday to Friday 16:00-20:00 The corresponding Hong Kong time is:
4. U.S. Stock Overnight Trading Hours
The overnight trading hours for U.S. stocks are Eastern Time (ET): Sunday through Thursday 20:00 - 4:00 the next day. The corresponding Hong Kong time is:
There is a time difference for buying US stocks in Hong Kong. The chart below summarises the corresponding Hong Kong time for US equities trading.
It should be noted that the liquidity of US stocks is generally weaker before, after closing and overnight trading. Important news from many listed companies in the US is also published during these periods, which can lead to greater volatility.
Futubull is the premier provider in Hong KongUS Stocks 5×24 Hours All-Day TradingThe platform allows trading and trading of US stocks at any time, and investors can take advantage ofFutu Night PaneCapture profit opportunities faster.
US Equity Entry: US Equity Entry Thresholds
Unlike Hong Kong stocks, US stocks do not have a “1 hand” concept. There are no restrictions on the trading units of US stocks and can buy and sell “1 share” in one go.
Extended Reading:Is it easier to get started with Hong Kong stocks compared to US stocks and more opportunities to make money?
Getting Started with US Stocks: US Stock Settlement Rules
The trading pattern for US stocks is T+0, which means buying US stocks on the same day can be sold on the same day.
The settlement rule for U.S. stocks is T+2, and U.S. stocks are settled two business days after the trading day. Cash earned from buying and selling U.S. stocks can only be withdrawn freely after settlement.
US Stocks Get Started: Limiting US Stock Rises and Losses
There is no limit to upside and decline in US stocks, but when the market swings too much, it will automatically trigger a US stock meltdown mechanism.
The US stock breakdown mechanism means that when the stock price fluctuates too much, the market forces a trading pause for a period of time before resuming trading again after a period of time.
The U.S. stock meltdown mechanism is based on the S&P 500 index and is divided into three phases:
Index Drops 7%, Trading Suspended for 15 Minutes
Index falls 13%, pauses again for 15 minutes
The index fell 20% and closed directly on the day
Extended Reading:Start investing in US stocks, look out for special days!
THE PURPOSE OF THE US STOCK MELTDOWN MECHANISM IS TO ALLOW THE MARKET TO CALM DOWN BY FORCING A TEMPORARY SUSPENSION OF US STOCK TRADING WHEN THE MARKET FLUCTUATES SHARPLY, PREVENTING PANIC FROM SPREADING AND CAUSING MASSIVE STOCK PRICE FALLS.
And then resume buying US stocks again, hoping that investors will also have time to think carefully about the risks and strategies involved in trading US stocks, do not blindly follow through, reduce unreasonable sell-offs, and restore market liquidity.
Step 2: Why Invest in the US Stock Market
The US equity market has experienced a long period of growth and growth, and is now one of the largest and most active stock markets in the world, with great investment appeal and value for beginners and beginners in US equities.
From a historical point of view, the beginning of the American stock market dates back to 1792, when the New York Stock Exchange (NYSE) was founded on Wall Street. Since then, as the US economy has grown, the US stock market has grown and expanded to become one of the most mature and stable stock markets in the world.
In terms of market size, the US stock market is the largest stock market in the world, attracting a large number of excellent companies to market here, such as those that are familiar with everyone.Top 7 Tech Giants in U.S. Stocks: APPLE (AAPL), MICROSOFT (MSFT), GOOGLE (GOOG), AMAZON (AMZN), INDIGO (NVDA), META, TESLA (TSLA). In addition, well-known companies in other countries, such as Alibaba (BABA) in China, TSMC (TSM), etc. can invest through US stocks.
Data Source:https://www.investopedia.com/magnificent-seven-stocks-8402262
Top 3 US Stock Exchanges
Before companies can be traded by investors after listing on an exchange, we need to understand the most representative and influential exchanges in the US equity market, which are:
The New York Stock Exchange (NYSE), Nasdaq (NASDAQ), and the American Stock Exchange (AMEX).
1. New York Stock Exchange (NYSE)
The New York Stock Exchange, simply referred to as the “New York Stock Exchange”, is the largest and most historic stock exchange in the U.S. stock market.
Most of the companies listed on the NYSE are historical, large-scale, and more stable businesses. For example, the well-known Coca-Cola, Walmart, and other companies.
2. Nasdaq Stock Exchange
The Nasdaq Stock Exchange is the most traded stock exchange with the largest number of listed companies in the U.S. stock market.
Most of the listed tech companies are listed here, including tech giants familiar to investors such as Apple, Microsoft, Google and others.
3. American Stock Exchange (AMEX)
Formerly the third largest stock exchange in the United States, the US Stock Exchange merged with the NYSE in 2008 and is now known as NYSE American.
Companies listed on the US Stock Exchange are mostly US small and medium-sized enterprises, with less stock trading volume and lower liquidity. Despite the lower threshold for listing, many U.S. stock companies choose to list first on the U.S. Stock Exchange, wait until the company grows and then goes on the NYSE, which is also known as a breeding ground for blue-chip stocks.
The top three U.S. stock indexes
After introducing the three perfect stock exchanges, let's take a look at the three major U.S. stock indices, which can help beginning investors better understand the overall condition and movement of the U.S. stock market. The U.S. stock market has three major indexes, including the S&P 500, the Nasdaq Composite Index, and the Dow Jones Industrial Index.
The S&P 500 Index (S&P 500), commonly referred to as the S&P 500 Index, is often considered to be the most extensive and comprehensive comprehensive index on the U.S. stock market.
The S&P 500 Index is composed primarily of the 500 companies with the highest market capitalization in the U.S. stock market, covering most sectors of the U.S. stock market. Constituent stocks account for approximately 80% of the total market capitalization of the U.S. stock market, and have a representative and leadership position across industries, and are often considered the most comprehensive index that best reflects the performance of the U.S. stock market.
However, there are limitations to the S&P 500 because there are market capitalization thresholds in which U.S. stocks are essentially large stocks, and some premium and potential growth stocks are not tracked for the time being.
The Nasdaq Composite Index (NASDAQ Composite) is often considered a representative index of U.S. stocks, technology stocks and growth stocks.
Consisting of all US stocks listed on the Nasdaq exchange, comprising more than 3000 stocks, mainly US equities companies in emerging industries such as high technology and semiconductors, are often considered a representative index of US tech stocks.
This also means that there is a certain limitation, since US stocks have a relatively large share of technology stocks, they often have the disadvantage of lower dispersion and greater volatility.
The Dow Jones Industrial, commonly referred to simply as the Dow, is the longest-running index in the history of the U.S. stock market.
The Dow refers to the initial preparation period, which includes 12 of the most representative US stocks in the US industry. Since then, it has been updated to include 30 of the largest and most well-known blue chip stocks in the US equities sectors, most of which are not industrial-related, but are distributed in food, finance, pharmaceuticals, technology, and more. Many familiar Microsoft, Apple, Visa, JPMorgan, Universal Health, and more are its constituent stocks.
Data source: Futubull, ranked among the top 5 companies by market value, data to 2024/2/16
Compared to other indices, index stocks are smaller and the weighting is weighted based on share price rather than market capitalization, which may be considered not to fully reflect the overall performance of the US equity market.
In summary, all three U.S. stock indices have their pros and cons. When investing, we can analyze the three U.S. stock indices in a comprehensive manner. However, in addition to the three major U.S. stock indexes, entry-level investors can also pay more attention to the performance of a U.S. stock sector, such as the Semiconductor Sector Index (SOX) tracking the semiconductor industry.
Example of constituent stocks shown in the chart showing three before the increase from early 2023 to October 2023
Extended Reading:An illustration to understand what the four major U.S. stock indexes are
Step 3: How to Buy US Stocks? Where to buy US stocks?
Account Opening Deposit
Knowing the basics of getting started with perfect stock investing, you must be wondering how to invest (buy and sell) US stocks?
Before investing (buying and selling US stocks), it is first necessary to open a securities (stock) account. To store money at the same time, you need to set up a bank account first. Futu offers standalone 5x24 hours US share trading, click here to find out.
Futu Securities US Stock Trading Steps
1. Head over to Futubull and sign up for a new account.(Register now)
2. Open a securities account on the foundation of a Futui Account and now open your account on Futui and send more than $1,000 in prizes.
Step 4: What are the types of US stocks and which US stocks are best for me to buy?
There are thousands of stocks on the US stock market size and size. Each company has its own characteristics and advantages, and the industries to which it belongs are different.
When new to investing in US stocks, they may often start by selecting the US stocks they want to invest in from the industry they like and are familiar with and build a portfolio of US stocks that suit them.
But you may not be very clear about which sectors are the US equity markets actually divided into? Let's continue reading the following:
What are the segments of the US equity market?
According to the Global Industry Classification Standard (GICS), the U.S. stock market can be divided into 11 segments, which are information technology, finance, healthcare, non-essential consumer goods, industrials, communications services, essential consumer goods, energy, real estate, materials, and utilities.
Data source: https://www.msci.com/documents/1296102/11185224/GICS+Methodology+2020.pdf/9caadd09-790d-3d60-455b-2a1ed5d1e48c?t=1578405935658
Extended Reading:Want to buy US stocks and pick them up? Check out the top 11 industries
1. Information Technology
The U.S. stock technology segment consists mainly of U.S. technology companies in the Internet software hardware and semiconductor categories.
The seven major U.S. tech giants that are familiar to everyone: Apple (AAPL), Microsoft (MSFT), Google (GOOG), Amazon (AMZN), Intel (NVDA), META, Tesla (TSLA) all belong to this industry.
Source: https://www.investopedia.com/magnificent-seven-stocks-8402262
2. Financial
The U.S. equity financial segment consists mainly of banks, insurers, brokers, real estate investment trusts, diversified financial services, and more.
For example, the top three companies by market capitalization* are Visa (V), JPMorgan (JPM), MasterCard (MA), etc.
3. Healthcare
The U.S. healthcare segment consists mainly of companies such as pharmaceuticals, biopharmaceuticals, healthcare services, and more.
For example, the top three companies by market capitalization* in this sector are: LLY (LLY), Novo (NVO), United Health (UNH), etc.
4. Consumer Discretionary
US stocks of essential consumer goods mainly include: electronics, hotels, clothing, luxury goods, automobiles, etc.
For example, the top three companies by market capitalization* in this segment are Tesla (TSLA), FedEx (HD), McDonald's (MCD), etc.
5. Industry
THE U.S. STOCKS ARE MAINLY COMPRISED OF AEROSPACE & DEFENSE, RAILWAYS & CONSTRUCTION, FREIGHT & LOGISTICS.
For example, the top three companies by market capitalization* are Caterpillar (CAT), General Electric (GE), United Pacific (UNP), etc.
6. Communication Service
The U.S. communications services segment is primarily comprised of telecom service providers, media companies, and entertainment companies, among others.
For example, the top three companies by market capitalization* in this segment are: Google (GOOG), META, Netflix (NFLX), etc.
7. Consumer Staples
The essential consumer segments of U.S. stocks include: Household & Personal Products, Food & Daily Goods Retail, Beverage, and more.
For example, the top three companies by market capitalization* in this sector are: Walmart (WMT), Boeing (PG), COST, etc.
8. Energy
The U.S. energy segment consists mainly of companies such as oil, natural gas & consumables, energy equipment & services.
For example, the top three companies by market capitalization* are: Exxon Mobil (XOM), Chevrolet (CVX), Shell (SHEL), etc.
9. Real Estate
The U.S. equity real estate segment is primarily comprised of real estate developers and managers, including real estate developers, real estate operating companies, etc.
For example, the top three companies by market capitalization* in this sector are: Plz (PLD), American Electric Power Station (AMT), Eiconnix (EQIX), etc.
10. Materials
The US stock material sector mainly includes: Chemicals, Containers & Packaging Boards, Metals & Mining, Building Materials, etc.
For example, the top three companies by market capitalization* in this sector are: Lind Group (LIN), Bibi Group (BHP), Litho Group (RIO), etc.
11. Utilities
The U.S. public sector consists primarily of companies engaged in the production of transportation or distribution of electricity and natural gas, as well as renewable energy producers.
For example, the top three companies by market capitalization* in this sector are: New Era Energy (NEE), Southern Power (SO), Duke Energy (DUK), etc.
Source of the above data: https://www.aastocks.com/tc/usq/market/industry/sector-industry-details.aspx
In different economic situations, U.S. stocks perform differently in different sectors, for example, defensive blocks are more resistant to falls during economic downturns; beginners who are just starting out understand which sectors are in U.S. stocks helps to understand the overall market trends and find the stocks that are leading at a given time., helps to create a portfolio that is right for you.
Step 5: What are the days to look out for when buying US stocks?
Extended Reading:Start investing in US stocks, watch out for special days!
Fed FOMC Meeting
Calling the wind, the Federal Reserve is the central bank of the United States and consists of three major pillars: the Board of Governors, the 12 Federal Reserve Banks, and the Federal Open Market Committee (FOMC).
Together, the Board and the staff of the 12 Federal Reserve Banks make up the Federal Open Market Committee (FOMC), which regularly holds 8 meetings a year, sometimes with more meetings in case of emergency, for example, during the COVID-19 pandemic, which held more than 5 interest rate meetings in March alone.
Overall, the Fed applies a tightening monetary policy in the face of overheating, putting an emergency brake on the heels of an economic downturn; an expansionary monetary policy when the economy is down, tapping the throttle, thereby achieving the goal of reducing market volatility and achieving stable economic functioning.
Therefore, the decision of the Fed FOMC meeting on whether to “raise” or “cut rates” will affect the direction of the entire US equity market. In general, interest rate cuts are used to stimulate the economy in times of recession or slowdown and benefit the U.S. stock market.
Whether you are new to investing in stocks or beginners, you need to keep an eye on the Fed's monetary policy, which may be better suited to finding investment opportunities and avoiding investment risks.
Here are the specific timelines for the Fed in 2024:
Extended Reading:The impact of Fed rate cuts on stock markets and bond markets
Results Period
U.S. STOCK PERFORMANCE TYPICALLY STARTS IN THE THIRD WEEK OF JANUARY, APRIL, JULY, AND OCTOBER EACH YEAR. U.S. STOCK COMPANIES PUBLISH PREVIOUS QUARTERLY RESULTS SUCCESSIVELY DURING THE PERFORMANCE PERIOD. WHY SHOULD INVESTMENT IN U.S. STOCKS FOCUS ON PERFORMANCE? There are mainly the following reasons:
Results can reflect the financial situation of a company in the past quarter, such as income, profit or loss, and thus better assess the value of a company's shares and investment risks, and U.S. equity investors can determine that it is not worth investing in by analyzing the company's development and prospects.
The results have a direct impact on the rise in the company's share price. If the company's performance exceeds expectations, the market's confidence in the company is strengthened and the stock price tends to rise; conversely, if the company's performance is not as expected, the market's confidence in the company decreases and the stock price tends to fall.
The performance of the US holding company, in addition to the volatility of its own stock prices, could affect the direction of the entire US equity market. If the results of the US stocks outperform expectations, it could add another fire to the whole situation. On the contrary, if it is not as expected, the enthusiasm of the market can be poured into a basin of cold water.
Futubull Financial Calendar allows stock investors to quickly view the performance dates of their individual performance periods at once, while also providing a filter selection function to help investors quickly select the stocks of the core instrument.
Day of the Four Witches
Many investors who are interested in US stocks have probably heard of a special day “Quadruple Witching Day”.
Four Witches Day refers to the expiration date of the four major U.S. stock financial derivatives on the third Friday of March, June, September, and December each year.
The four major U.S. stock financial derivatives are: stock index futures, stock index options, individual stock futures, and individual stock options.
Since the four US equity derivatives expire on this day, many investors are trading and adjusting their positions, there is often a significant increase in the trading volume of the US equity market as a whole.
Market volatility also increases as trading volume increases. During this time, uncertainty is high in the US equities market as a whole, which could magnify gains for US investors, as well as losses. Therefore, US equity investors need to pay more attention to investment risk at this time.
13F Holding Announcement Date
13F Filings refer to institutional investors who invest in the US equity market with assets of more than $1 million or more that are required to be disclosed quarterly.
The US Securities and Exchange Commission (SEC) requires institutional investors who invest in the US equity market with assets of more than $1 billion to file a 13F report with the SEC within 45 days of the end of each quarter, disclosing assets they currently hold and providing the direction of the funds concerned.
Therefore, usually before the 15th of February, May, August and November, investors from large institutions will announce changes in their positions and chips. As you're most concerned about: Buffett-controlled Pokeshia, Soros Fund, Bridgewater Fund, and more.
Simply put, if you want to understand the holdings of large institutional investors in US stocks, the 13F report will be the best source of information so that US equity investors can know the movement of these Smart Money.
For lazy investors in U.S. stocks, the 13F report can also serve as a “U.S. stock investment compass”, providing reference stock options strategies for beginning investors.
Getting Started with US Stocks Step 6: What do US and Hong Kong stocks have in common and different?
Extended Reading:Is it easier to get started with Hong Kong stocks compared to US stocks and more opportunities to make money?
What US and Hong Kong stocks have in common
The trading pattern is the same: US and Hong Kong stocks are trading at T+0, meaning US and Hong Kong stocks bought on the day can be sold on the same day.
The settlement rules are the same: the settlement rules for US stocks and Hong Kong stocks are T+2, and cash from US stocks and Hong Kong stocks can only be withdrawn freely after T+2 settlement.
No rise and fall limit: There is no 10% increase drop limit
Differences between US stocks and Hong Kong stocks
1. Trading time is different
Hong Kong stocks are trading hours: 9:30 a.m. to 12:00 p.m., 13:00-16:00 with a one-hour closing time of noon, while U.S. stocks are trading hours from 9:30 a.m. to 4:00 p.m.
2. Different entry thresholds
The basic trading unit of Hong Kong shares is “1 hand”. 1 hand is equal to 100 shares to 5000 shares, less than 1 share is referred to as a fractional share.
US stocks do not have the concept of “1 hand” and there is no limit to the minimum trading units of US stocks, which can be bought and sold 1 share at a time.
3. The transaction code is different
The trading code for Hong Kong shares is 5 digits starting with 0. For example, Tencent is 00700 and Alibaba is 09988.
The trading code for U.S. stocks is the English abbreviation for the company, such as Apple for AAPL and Microsoft for MSFT.
4. Different transaction tax
STAMP DUTY IS SUBJECT TO TAX ON HONG KONG SHARES. STAMP DUTY IS CALCULATED AT 0.1% * OF THE TRANSACTION AMOUNT, NO DIVIDEND TAX.
On the other hand, income from US stocks is subject to 30% dividend tax and 30% of dividends is subject to tax.
See the conclusion of the entry point of US equity investment. If you want to learn more advanced stock trading knowledge, please come to Futubull and create your own long-term investment system!
Open now in Futu and send more than $1,000 in prizes, click here for offer details
Note: * Data as of February 20, 2024.
