What do I need to know before trading U.S. stocks？

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Beginner's Guide: Introduction to Stock Trading in the USA

To trade stocks, the first step is, of course, to open a stock account. So for beginners, how should account opening be done? This article will elaborate on the entry-level operation of US stock trading from five aspects: account opening process, trading hours, trading rules, trading fees, minimum trading unit.

01. US stock account opening process

Required materials:

1. Mainland Chinese residents

1.1 Second-generation Chinese mainland ID

1.2 Debit card with the same name as the account opened in csi china mainland banks index, recommended to use ICBC, ABC, BOC, CCB, BCM, CMBC and other banks' debit cards, for real-name authentication only, not related to fund deposit and withdrawal

2. Hong Kong and Macao residents

2.1 Hong Kong permanent resident ID card + address proof (issued within the last three months)

2.2 Hong Kong resident ID card + Hong Kong visa identity document + address proof (issued within the last three months)

2.3 Hong Kong resident ID card + Chinese mainland ID card + address proof (issued within the last three months)

Specific account opening process

2. Trading Hours

1. Continuous Trading Session

The continuous trading session for US stocks is in Eastern Time (ET): Monday to Friday 9:30-16:00.

During US Daylight Saving Time (March-November): Beijing Time 21:30-4:00.

During US Standard Time (November-next year March): Beijing Time 22:30-5:00.

2. Pre-Market and After-Hours Trading

US stocks allow pre-market and after-hours trading outside of the continuous trading session. Orders placed during pre-market and after-hours will be matched on the exchange. Both NYSE and NASDAQ have specific pre-market and after-hours trading sessions, each brokerage has different requirements for these trading periods. Futu's trading platform specifies:

2.1 US Pre-Market Trading Session: 04:00-9:30 (ET)

Daylight saving time is 16:00-21:30 Beijing time, and standard time is 17:00-22:30 Beijing time.

2.2 Post-market trading hours for USA: 16:00-20:00 (ET)

Daylight saving time is 4:00-8:00 Beijing time, and standard time is 5:00-9:00 Beijing time.

2.3 Post-market trading hours for USA's half-day market: 13:00-17:00 (ET)

Daylight saving time is 1:00-5:00 Beijing time, and standard time is 2:00-6:00

03, Trading Rules

Different from A shares, both USA stocks and Hong Kong stocks do not have daily trading limits, so investors need to control risks.

1. Trading System

USA stocks support a T+0 trading system.Stocks bought on the same day can be sold on the same day.After purchasing, if investors determine a mistake, they can sell promptly to avoid risks and prevent losses from escalating.

2. Settlement Mechanism

USA stocks implement a T+2 delivery system.That is, clearing and settlement are completed on the second trading day after the transaction.

Assuming on trading day (today) after the completion of the settlement, the amount in your account is 0.05 million. You bought 0.03 million shares on T-1 day, and 0.02 million shares on trading day, then your pending settlement amount on T+1 day is -0.03 million, and on T+2 day it is -0.02 million; in order to avoid default in settlement on the next two trading days, the maximum amount you can withdraw today is 5-3-2=0.

3. Other restrictions explained

As a limit order for opening a position, Futu's risk control system will reject the order if the price deviates more than 40% from the market price.

A very small portion of stocks require entering a fixed price in order to place an order, such as entering multiples of 0.05 or 0.5.

Orders that meet Futu's risk control rules will be submitted upstream, but may also be rejected if they do not meet the upstream risk control rules. Common reasons include: significant price deviation, temporary trading unavailability, inability to find the corresponding stock code, etc.

Short sell operations are currently not supported for conditional orders.

Pre-market and post-market market orders will be submitted to the exchange, but may not be executed.

Upstream brokerages define orders of less than 100 shares as odd lot orders.

Orders submitted during non-traditional trading hours may be sent to non-traditional exchanges. If the order quantity is less than 100 shares (odd lot orders), the upstream does not need to report the fill price to the exchange, thus the relevant order information cannot be found in market data.

Trading fees

The main trading fees for US stocks consist of trading commissions + platform fees + collection fees, for specific fee details, please refer to the link below.

Click to view details of US stock fees

05. Minimum Trading Unit

Different from A shares and Hong Kong stocks, US stocks do not have the concept of 'lots', the minimum trading unit is 1 share.

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