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How to trade the US stock market

Reading time: 14 minutes

Did you know that the two largest stock markets in the world are both in the United States (US)? Both the New York Stock Exchange and the Nasdaq Stock Exchange stock markets are home to the world's most recognised companies such as Apple, Facebook and Google. The ability to access and trade in these stock markets has never been easier, and is one reason why individuals from all around the world are eager to learn how to trade the US stock market.

How to trade the US stock market

In this article, we will explain how to trade the US stock market, what affects the price movement of US stocks and how you could start buying or selling the American stock market today!

What is the US stock market?

The stock market is essentially an auction place where investors buy and sell shares of publicly listed companies. A stock market is controlled and regulated by a stock exchange. For example, the US stock market is run by two of the world's largest stock exchanges - the New York Stock Exchange and the Nasdaq Stock Exchange. They help to facilitate all the buying and selling of shares in publicly listed companies like Amazon, McDonald's, Nike, Wal-Mart and more.

The total value of the US stock market fluctuates everyday depending on how much buying and selling is happening. According to the Intercontinental Exchange, who bought the New York Stock Exchange in 2013, the total value of the US stock market in the New York Stock Exchange on 31 January 2018 was over $30 trillion. This has been calculated by using US stock market data from all of the thousands of companies listed on the exchange.

What is a US stock market index?

As there is a wide variety of companies from different types of sectors listed in the US stock market, the exchanges created a selection of US stock market indexes to help economists, fund managers, journalists, traders and investors measure a section of the stock market. For example, the following US indices are the three largest and most-recognised US stock market indexes in the US stock market and each has a specific focus:

  1. The S&P 500 Stock Market Index. This index measures the value of the largest 500 listed companies on the New York Stock Exchange and is considered as the best representation of the overall US stock market.
  2. The Nasdaq 100 Stock Market Index. This index measures the value of the largest 100 listed companies on the Nasdaq Stock Exchange. While this index includes companies from various industries - albeit mainly technology-related companies - it does not include financial industry companies like commercial or investment banks. The index is considered as the best representation of the US technology sector.
  3. The Dow Jones 30 Stock Market Index. This index was developed to track the US stock market performance in 1896 when individual company information was limited. The aim of the 30 stocks listed in the index is to reflect the dominant sectors that help the American economy. This is why there are a variety of companies from all different sectors included in it. Over time some companies drop out and others are promoted. As of mid-2019 some of the Dow Jones 30 companies include American Express, Apple, Boeing, Coca-Cola, Disney, Goldman Sachs, McDonald's, Microsoft, Nike, Verizon and more.

Now let's look at how to trade the US stock market, how to access US stock market data to trade on and why using a US stock market chart could prove to be very useful in helping to make your trading decisions.

Did you know that you can trade on US stock market indexes, as well as on companies such as Apple, Facebook and Netflix all from one trading platform, which also happens to be completely FREE to download? Get your free download by clicking the banner below!

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How to trade the US stock market online

If you want to learn how to buy US stocks, the first thing is to know the trading tools you need to start:

1. How to buy US Stocks? Use a broker!

If you want to buy shares in a particular company, such as Facebook, you need to find someone who not only owns some Facebook shares but is also willing to sell them to you. This is what your broker does for you. Through your broker's trading platform they route your buy and sell orders to other buyers and sellers through their connection with the stock exchange that lists the shares of the company you are trading.

With the right broker you can buy and sell US stocks in seconds without meeting the person on the other side of your trade. A broker will also hold your capital to trade or invest with so it's important to choose the right broker when learning how to buy US stocks, ideally one that offers the highest regulation, security and safety as possible.

For example, investment firms operating under the Admiral Markets trademark offer the highest regulation from the UK's Financial Conduct Authority, the Australian Securities and Investments Commission, and Estonian Financial Supervisory Authority and Cyprus Securities and Exchange Commission.

Not only that, but those who choose to use the Admiral Markets fast, secure and free trading platform also benefit from a negative balance protection policy which will protect you from adverse movements in the market, as well as the ability to:

  • Open multiple types of trading and investing accounts such Admiral.Invest where you can buy shares in companies from 15 global stock exchanges and receive free free-time market data.
  • Open a CFD (Contract for Difference) trading account to go long and short a market to potentially profit from rising and falling markets, as well as access leverage of up to 1:500 for Professional clients and up to 1:30 for Retail clients.
  • Access the fastest and most secure trading platform in the world, MetaTrader, for Web, Windows, Mac, iOS and Android operating systems.
  • Trade on multiple asset classes such as US stocks, international stocks, indices, commodities, currencies and cryptocurrencies.

Did you know you can access all of these features and test drive Admiral Markets as a broker by opening a FREE demo trading account? This allows you to trade in a risk-free environment until you are ready for a live trading account. To open your free demo account, simply click the banner below:

Trade With A FREE Demo Trading Account

2. How to access US stock market data? Use the best trading platform!

Your trading and charting platform will help you to access important information you need to trade the US stock market. This includes US stock market news, US stock market charts and US stocks prices of different publicly listed companies. With the advent of advanced trading technology, you can now have your charting platform and brokerage platform all in one place with the Admiral Markets MetaTrader suite of products. This means you can also access your order tickets when viewing US stock market graphs and general US stock market data.

Admiral Markets offers the following MetaTrader trading platforms:

Through the above platforms, you can trade across the US stock market, as well as a variety of other markets such as US stock market futures and indexes, commodities, foreign exchange and other international shares.

3. How to trade US stock market hours? Create a routine!

Creating a routine of when you will analyse the American stock market can help in making high quality trading decisions. This is because if you know when you will be trading you can bring a high level of focus to it. The first step is to know the US stock market hours you can trade in.

The US stock markets are located in New York with the New York Stock Exchange in Wall Street and the Nasdaq Stock Exchange in Times Square. Both open at 9.30 am and close at 4.00 pm New York time (Eastern time) Monday to Friday.

So, if you are in the United Kingdom the US stock market hours will be from 2.30 pm to 9.00 pm UK time. There are several public holidays to be aware of during the year when the US stock market is closed. Using the Admiral Markets Economic Calendar can help you stay up to date.

4. How to buy US stocks? Open a trading ticket!

Once you've opened your live, or demo trading account, download your free trading platform and found the right routine for yourself you can then start to make trading decisions on the US stock market future and what shares to buy or sell. Now you're probably wondering how to buy US stocks in your MetaTrader trading platform? It couldn't be simpler, using the following steps:

  1. Open MetaTrader.
  2. Open the Market Watch section from the View menu at the top or by pressing Ctrl+M on your keyboard. This will open up a list of market symbols on the left side of your chart.
  3. Right-click on the Market Watch window and select Symbols or press Ctrl+U on your keyboard.
  4. This will then open the window shown below which details all the markets available for you to trade on.

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

Now you can left-click on one of the symbols you would like to view and drag it on to the chart to view US stocks prices of the symbol you've chosen. From here you can now open up a trading ticket:

  1. Right click on the chart.
  2. Select Trading.
  3. Select New Order, or press F9 on your keyboard.
  4. A trading ticket will open for you to input your entry price, stop loss and take profit levels and unit size (volume).

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

To learn more on how to buy US stocks and participate in the US stock market, open your free Admiral Markets MetaTrader platform and watch the video below on how to trade on it!

Now you know how to buy US stocks and trade the US stock market, the next step is to understand what affects US stocks prices so you can identify stocks which offer the best price movement for you to trade on.

What affects US stock market prices?

There are a variety of factors that affect the US stock market, such as:

1. The Economy

Stock markets generally move higher during periods of economic growth as this environment usually means higher employment, more consumer spending and more profits for companies. If companies begin to make more profits investors tend to buy more stocks of those companies which, in turn, helps to push up the overall stock market.

Therefore, investors pay close attention to economic data such as:

  • Employment numbers.
  • Central bank policy on interest rates.
  • Inflation reports.
  • Retail sales and consumer spending figures and more.

Investors will look for a trend in different economic indicators rather than react on just one good or bad economic data point. For example, if unemployment starts to rise and retail sales numbers start to fall it could translate into lower spending which could affect company profits. This may cause some investors to exit some investments and re-allocate their funds elsewhere, thereby affecting the overall stock market direction.

2. Politics

As the US government set tax policies and control overall spending and immigration, politics can have a big impact on the US stock market. The effect of politics on the stock market is seen during election season where presidential candidates sell their policies to big businesses and consumers.

For example, when Donald Trump was elected US President in November 2016 the US stock market entered a very strong multi-year rally higher. This is because he promised lower corporate taxes for businesses which meant more profits in the vaults of American companies. The initial effect on the US stock market after Trump's election can be seen in the long-term price chart of the S&P 500 stock market index below:

Source: Admiral Markets MetaTrader 5, SP500, Weekly - Data range: from Dec 27, 2015, to Aug 21, 2019, accessed on Aug 21, 2019, at 4:07 pm BST. - Please note: Past performance is not a reliable indicator of future results.

However, it can also work the other way. For example, in 2017 Trump began a trade-tariff war with China, using Twitter to express his displeasure with Chinese trade practices. This uncertainty led US stock markets to enter a volatile and range based period, as highlighted in the S&P 500 price chart below:

Source: Admiral Markets MetaTrader 5, SP500, Weekly - Data range: from Dec 27, 2015, to Aug 21, 2019, accessed on Aug 21, 2019, at 4:07 pm BST. - Please note: Past performance is not a reliable indicator of future results.

For some investors, it can be challenging to trade in such volatile times. This is why it's important to have access to the right trading products. For example, Admiral Markets offers CFD (Contract for Difference) trading accounts which means a trader could potentially profit from rising and falling markets by 'shorting stocks'.

But, during good economic times where the US stock market is rising many traders often try to invest into shares and hold them for a longer period of time. One benefit - on top of a potentially rising share price - is receiving a regular piece of the company profits via dividends.

Admiral Markets offers both types of trading and investing accounts giving both traders and investors the flexibility to trade the US stock market during different market conditions.

How can people invest in the stock market with Admiral Markets?

If you are also thinking of taking a long-term view of the stock market and would like to invest in public companies from around the world, you may consider the Admiral.Invest account where you can enjoy benefits such as:

  • The ability to invest in thousands of stocks and ETFs from 15 of the largest stock exchanges in the world.
  • Open an account with just €1 minimum deposit and invest from just $0.01 per share with minimum transaction fees of just $1 on US stocks.
  • Receive free real-time market data, with no delays, at no extra cost.
  • Create a stream of passive income by collecting dividend payouts.
  • Use the world-renowned MetaTrader 5 multi-asset class trading platform.

You can get started right now by clicking the banner below and enjoying all of the features above and more!

Invest in Stocks & ETFs

About Admiral Markets

Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or recommendation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.