The US stock market is home to global giants like Tesla, Nvidia, Apple, and Amazon – and if you’re a Singapore investor looking to tap into these opportunities, you’re in the right place. With a fully digitized trading environment and a user-friendly app like Tiger Trade, entering the world of US stocks has never been easier.
This guide will walk you through the essentials - from understanding the market and choosing a broker to crafting a smart trading strategy - so you can start trading with confidence.
Understanding the US stock market
The US stock market allows investors to trade shares of leading global companies across various sectors, providing a great opportunity for portfolio diversification. Its efficient structure and transparency make it an attractive destination for investors worldwide. Additionally, the market offers potential for both short-term gains and long-term growth. Here are some key things you should know
Key stock indices
Dow Jones Industrial Average (DJIA)[1]: Often used as a benchmark, it represents 30 leading blue-chip companies.
S&P 500[2]: It tracks the performance of 500 large-cap companies and offers a broader market perspective.
NASDAQ Composite[3]: Focuses on technology and growth stocks and features many innovative companies.
By analyzing these indices, you can better understand market trends and evaluate the performance of different sectors. For instance, the S&P 500 provides a broad view of the overall market, while the NASDAQ highlights the performance of the tech sector, offering insights into its growth.
Major exchanges
The New York Stock Exchange (NYSE)[4] and NASDAQ[5] are the primary platforms where US stocks are traded. While the NYSE lists more established firms, the NASDAQ is synonymous with tech and growth companies.
Types of stocks
Blue-Chip Stocks[6]: These are shares of large, reliable, and well-established companies, often included in the Dow Jones Industrial Average (DJIA). They are known for their stability and consistent performance.
Growth Stocks[7]: These belong to companies expected to grow quickly in the future. Many are technology-focused and listed on the NASDAQ.
Value Stocks[8]: These are shares of companies that seem undervalued compared to their true worth, offering the potential for long-term profits.
As you begin to explore these stocks, it’s important to consider strategies that allow you to manage your investments more effectively and flexibly. One effective strategy to begin with is investing smaller amounts through the use of fractional shares[9]. This feature allows investors to participate in high-value stocks without purchasing a full share, making it more accessible for beginners who want to build confidence before scaling up their investments.
How to start trading US stocks?
Trading US stocks today is easier than ever. Using the Tiger Trade app as an example, here's a step-by-step guide to getting started:
Create an account
Download the Tiger Trade app and sign up to create an account. Submit the required identification documents and complete the verification process. Once approved, deposit funds into your account to start trading.
Search for stocks and track your portfolio
Use the intuitive search feature to find popular US stocks, such as those from indices like the Dow Jones or NASDAQ. Tiger Trade allows you to track the performance of your portfolio. You can also view real-time stock prices, which gives you an up-to-date market insight.
Start small with fractional shares
Tiger Trade provides a fractional shares feature, allowing you to invest in high-value US stocks with just a few dollars. This lowers the entry barrier, making it an excellent option for beginners to gain experience and build confidence through small investments before gradually increasing their stakes.
Creating your stock trading strategy
Before you dive into the US stock market, it’s essential to develop a strategy that suits your goals and risk tolerance.
Selecting stocks
When selecting stocks, begin by analyzing a company’s financial statements, such as its income statement, cash flow statement, and balance sheet. These documents provide valuable insights into the company’s financial health. Additionally, examine industry trends to assess whether the company is poised for growth. Evaluate broader factors like the economic environment, competitive landscape, and the company’s future prospects to make well-informed investment decisions.
Additionally, you can check real-time market quotes, news updates, and company dynamics directly on through the Tiger Trade app to help identify suitable stocks. (*The market information provided on Tiger Trade is for informational purposes only and does not constitute investment advice.)
Investment strategies
There are two main approaches:
Long-term investing[10]: Buy stocks with strong growth potential and hold them for years to let the company grow.
Short-term trading[11]: Buy and sell within days or weeks to profit from price fluctuations.
Choose based on your goals and risk tolerance. Long-term investing is typically suited for investors looking for steady growth over time, willing to accept short-term fluctuations in exchange for potential long-term gains. On the other hand, short-term trading is more appropriate for those who prefer quicker profits, are comfortable with higher risk, and are prepared for more frequent market movements.
Setting goals, stop-loss, and take-profit levels to manage risk
To manage risk, use tools like:
Stop-loss[12]: Automatically sell if the stock drops below a set price to limit losses.
Take-profit[13]: Lock in gains when the stock hits your target price.
These safeguards can help you stay in control and avoid emotional decisions.
Risk management in stock trading
Diversify your portfolio
Avoid concentrating all your funds in one sector. Diversify your investments across various industries, such as technology, healthcare, and finance. If one sector underperforms, others can help offset the losses, reducing your overall risk.
Avoid common mistakes
Beginners often fall into these traps:
Emotional trading: Don’t let fear or greed dictate your moves. Stay rational.
Over-leveraging: Borrowing too much can amplify losses.
Lack of research: Jumping in without understanding the market can could lead to poor decisions.
The key is to plan carefully, take it step by step, and continuously improve your knowledge. A disciplined approach will set you up for long-term success to plan carefully, start small, and keep learning. A steady approach will set you up for success.
Conclusion
Investing in US stocks can be a rewarding opportunity for beginners, but it’s crucial to start small, continuously learn, and stay patient. By diversifying your portfolio, steering clear of common pitfalls, and effectively managing risks, you’ll gradually build experience in the stock market. Keep in mind that consistent, steady progress is essential for achieving long-term success in trading.
References
[1] https://www.investopedia.com/terms/d/djia.asp
[2] https://www.investopedia.com/terms/s/sp500.asp
[3] https://www.investopedia.com/terms/n/nasdaqcompositeindex.asp
[4] https://www.investopedia.com/terms/n/nyse.asp
[5] https://www.investopedia.com/terms/n/nasdaq.asp
[6] https://www.investopedia.com/terms/b/bluechip.asp
[7] https://www.investopedia.com/terms/g/growthstock.asp
[8] https://www.investopedia.com/terms/v/valuestock.asp
[9] https://www.investopedia.com/terms/f/fractionalshare.asp
[10] https://www.investopedia.com/terms/l/longterminvestments.asp
[11] https://www.investopedia.com/terms/s/shorterminvestments.asp
[12] https://www.investopedia.com/terms/s/stop-lossorder.asp
[13] https://www.investopedia.com/terms/t/take-profitorder.asp
Disclaimer : The information expressed herein is current and does not constitute an offer, recommendation or solicitation, nor does it constitute any prediction of likely future performance. Investment involves risk. The price of investment instruments can and do fluctuate, and any individual instrument may experience upward or downward movements, and under certain circumstances may even become valueless. Past performance is not a guarantee of future results. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any person or affiliated companies. Before making an investment decision, you should speak to a financial adviser to consider whether this information is appropriate to your needs, objectives and circumstances. Tiger Brokers (Singapore) Pte. Ltd. assumes no fiduciary responsibility or liability for any financial consequences or otherwise arising from trading in investment instruments if opinions and information in this document may be relied upon.
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