A Beginner’s Guide to U.S. Stocks: From Opening a Brokerage Account to Making Your First Trade

TL;DR: The U.S. stock market is one of the world’s largest equity markets, and Hong Kong investors can participate by opening an account through an online brokerage platform. This article covers the account-opening process, funding methods, trading hours, and key tax considerations to help you take your first step into investing in U.S. stocks.

Stepping into the world of U.S. stocks is both exciting and a little unfamiliar for many people in Hong Kong. The U.S. market brings together many global technology and consumer companies with enormous market capitalizations. For beginners, understanding the basic rules and the account-opening process is essential preparation before getting started. Below is a summary of the core knowledge you need—from opening an account to completing your first trade.

U.S. Stocks: Essential Basics Every Beginner Should Know

The U.S. stock market includes three major exchanges: the New York Stock Exchange (NYSE), Nasdaq, and the American Stock Exchange (AMEX). The three major indices are the Standard & Poor’s 500 Index (S&P 500), the Nasdaq Composite Index, and the Dow Jones Industrial Average (Dow Jones).

Key Differences Between U.S. Stocks and Hong Kong Stocks

Hong Kong stocks are traded in board lots, and the number of shares per lot varies by stock, so the initial entry cost may be relatively high. U.S. stocks, by contrast, are traded by the share—there is no restriction even if you buy just one share—so the entry threshold is more flexible. Also, U.S. market convention is “green up, red down,” which is the opposite of Hong Kong’s “red up, green down,” so beginners should pay close attention to this at the start.

Opening a U.S. Stock Account for Beginners: What Do You Need to Prepare?

Opening a U.S. stock trading account is the first step to investing. Hong Kong investors can apply directly through an online brokerage platform, and the whole process can be completed in a mobile app.

Documents Required to Open an Account

• Hong Kong Identity Card or passport (valid)
• Proof of address: such as a bank statement or utility bill (issued within the last three months)
• Form W-8BEN: a declaration of non-U.S. tax residency, valid for three years

Form W-8BEN is a required document for non-U.S. residents investing in U.S. stocks. Under U.S. tax rules, once it is correctly completed, capital gains from trading U.S. stocks by non-U.S. tax residents are generally not subject to U.S. capital gains tax.

Main Steps for Opening an Account

Using Longbridge Securities as an example, the account-opening process can be completed in the mobile app: upload your identity document and proof of address, fill in your personal information and investment background, confirm the risk disclosure statements, then link a Hong Kong bank account in your own name for verification and submit the application.

Tip: Form W-8BEN is valid for three years. You must resubmit it before it expires to maintain your exemption as a non-U.S. tax resident.

Once your account is approved, you can start trading by transferring funds into it. Funding in U.S. dollars is recommended to avoid additional foreign exchange conversion costs. For details on how to fund your Longbridge account, please refer to the funding guide.

U.S. Stock Trading Hours: Hong Kong Time Reference

Because there is a time difference between Hong Kong and the U.S., trading hours are a key basic that beginners must understand.

Since the U.S. observes daylight saving time, U.S. stock trading hours are adjusted twice a year:

• Daylight saving time (approximately mid-March to early November): 21:30 to 04:00 Hong Kong time
• Standard time (approximately early November to mid-March): 22:30 to 05:00 Hong Kong time

Some platforms offer pre-market and after-hours trading, but liquidity during these sessions is relatively lower. Beginners are advised to understand the relevant risks before considering participation. U.S. stock market holidays also affect trading arrangements. For more information, please refer to the U.S. stock market holiday schedule and trading strategies.

Key Tax Considerations for U.S. Stocks

There is no comprehensive bilateral tax agreement between Hong Kong and the United States, so Hong Kong investors should understand two tax-related matters:

Capital gains tax: Capital gains earned by non-U.S. tax residents from trading U.S. stocks are generally not subject to U.S. capital gains tax, provided that Form W-8BEN has been completed correctly.

Dividend withholding tax: Dividends from U.S. stocks are subject to U.S. withholding tax. Under Internal Revenue Service (IRS) rules, U.S.-source dividends paid to non-U.S. tax residents are generally subject to withholding at a rate of 30% (a lower rate may apply if a tax treaty is applicable). This is automatically deducted when dividends are paid (source: Internal Revenue Service). If your investment strategy focuses on dividend income, this tax should be included as a cost in your planning.

Tip: Different strategies rely on dividend income to different degrees, so the impact of the 30% dividend withholding tax on overall returns will vary by strategy. Investors should evaluate this as part of their planning.

Your First Trade: Order Types and Basic Rules

After opening your account and funding it, you can place your first U.S. stock trade. Understanding the basic order types can help you make clearer decisions when executing trades.

Market Order: Executes immediately at the current market price. Simple to use and suitable for highly liquid stocks.

Limit Order: Lets you set a specific price at which you are willing to buy or sell. The order will execute only if the condition is met, helping you control trading costs more effectively. You can refer to this comparative analysis of limit orders and market orders to learn more.

U.S. stocks use a T+2 settlement cycle, meaning the cash and securities are formally settled on the second business day after the trade is completed. When managing cash flow, be mindful of this time gap.

Frequently Asked Questions

What should beginners learn first about U.S. stocks?

It’s recommended to first understand the basic concepts of the three major U.S. exchanges and key indices, the trading differences between U.S. and Hong Kong stocks (such as trading units and settlement systems), and tax arrangements. Through Longbridge Academy, you can systematically learn more investment fundamentals.

What is the minimum amount of money needed to buy U.S. stocks?

U.S. stocks are traded by the share, so the minimum amount depends on the share price of the stock you choose. Some platforms offer fractional shares, allowing investors to participate with a smaller amount. Different platforms may also impose minimum deposit requirements, so it’s advisable to review the relevant terms before opening an account.

How can I keep up with U.S. stock market developments?

The Longbridge platform provides real-time market data and a range of investment research tools, allowing you to track price movements and use the AI research assistant PortAI for market analysis. Longbridge Securities holds Type 1, 2, 4, and 9 licenses from the Securities and Futures Commission (SFC) of Hong Kong, providing investors with compliant investment services.

Summary

For U.S. stock beginners, the most important thing before entering the market is to build a clear foundational knowledge framework: understand the market structure, complete the account-opening process, become familiar with trading hours and tax arrangements, and then use small trades to get comfortable with the process. Investing in U.S. stocks is essentially participating in the global market—where opportunities and risks coexist—and every investor should make decisions based on their own investment objectives and risk tolerance.

Which instrument you choose depends on your investment objectives, risk tolerance, market outlook, and level of experience. Regardless of which investment instrument you choose, you must fully understand how it works, its risk characteristics, and its trading rules, and establish a robust risk management plan. You can learn more about investing through Longbridge Academy or by downloading the Longbridge App.