How to buy US share CFDs

Ever wondered how to trade the US stock market? There are several ways to do it, with one of the most popular ways being through share CFDs.

With so many ways to trade the markets nowadays, we wanted to show you that with even a little capital you can access some of the largest companies in the world at full exposure.

In this article, we’ll cover everything you need to know about how to buy and sell US share CFDs so you can get a piece of the action in the US stock market.

What is the US stock market?

One of the most popular stock markets in the world is the US stock market. It is the biggest stock market in the world, containing over 4,000 companies from stock exchanges such as the NYSE (New York Stock Exchange), NASDAQ, AMEX and more.

The US stock market is also home to some of the world’s most popular stocks and companies that are household names, with popular stocks ranging from Facebook and Apple to Amazon and Netflix.

Recommended reading: What are FAANG stocks and how to buy them?

What are the best ways to trade stocks?

The two main ways to trade the US stock market are through share CFDs and traditional share trading.

There are some key differences between CFD and share trading but while both allow you to profit from the fluctuations of stock prices, share CFDs offer some benefits that traditional share trading does not.

Flexibility to go long and short

Since share CFDs are derived from price movements of shares, rather than ownership, you have the flexibility to trade or speculate whether the price is going up or down. This allows you to potentially profit from both market directions (i.e. when the price of the underlying stock is rising or falling).

Traditional share trading differs from this by deriving value from ownership. This essentially means you need the stock price to increase in order to make a profit. And that means you can only trade one direction of the market – for the price to rise.

Leverage

Share CFDs also allow you to trade them on margin. This means you only need to put up a small percentage of the full value of a trade in order to open the position. Conversely, investing directly in traditional stocks often requires a lot of capital because you’re paying the full price for every single share you are buying.

For most CFD brokers, a trader only needs to pay 5% of the full price of the share. In practice, this means you can purchase approximately 20 times as many positions of a share with the same amount of capital, when compared to traditional shares.

Investing vs trading shares

One of the main differences between trading and investing is the direction you are playing in the stock market.

For people who choose to invest, they are primarily expecting prices to rise in the stocks they invest in. If the stock prices were to fall, they would be losing money.

However, when it comes to trading, a trader looks to play both directions of the market – going long when they expect prices to rise and going short when they expect prices to fall. In both situations, they have the opportunity to earn money.

Another important consideration is the difference in time horizons between trading and investing. Investors tend to hold onto their purchases for a longer period of time, expecting prices to rise. Traders tend to hold their trades for a shorter period of time, usually playing the smaller price fluctuations.

The last key difference is the focus on types of analysis used to make decisions. Investors tend to use quantitative and qualitative fundamental analysis to see if a certain stock is undervalued – essentially looking to make an investment, then watch them grow. Traders, on the other hand, tend to have a heavier focus on technical analysis, looking to play both the ups and down as the price of a stock fluctuates.

How to trade US share CFDs

Follow our simple step-by-step guide to start trading US share CFDs:

• Register a live trading account with Axi
• Download the MetaTrader 4 trading platform and log into your account
• Once you’re logged in, click Ctrl+M to open the “Market Watch” panel
• Right-click and select either “Show All” or “Symbols” to view all the available symbols to trade

• Locate the “Stocks” group and double-click to make your chosen stock symbol appear in the Market Watch window
• Once you have selected a symbol, right-click on it and select “Chart Window” to open that stock CFDs chart

• To place a trade, right-click anywhere on the chart, then click “Trading” and select your "Order Type"

Why are FAANG stocks popular?

FAANG is an acronym for the five largest companies in the technology sector of the US Stock Market. They are:

F - Facebook (FB)
A - Apple (AAPL)
A - Amazon (AMZN)
N - Netflix (NFLX)
G - Google (GOOG or GOOGL)

As well as being household names due to the nature of the services they provide, the FAANG stocks will be familiar to most people simply because of how large and profitable they are. But perhaps the most important thing for us as traders and investors is that they continue to have strong potential for growth.

What are the best US shares for beginners?

New traders commonly ask what are the best shares CFDs for beginners. The broad answer is that, as someone new to trading, it’s better to trade more popular stocks. This is because these stocks often have wide media coverage and large discussion forums dedicated to discussing their every move. This is a sort of self-regulating feature that prevents inaccurate and false information from deceiving investors.

What are the costs of trading US share CFDs?

Axi charges no commission on share CFD trades.

Please note that there may be fees for holding positions overnight. Overnight holding rates for share CFDs are based on the underlying interbank rate for the currency of the relevant share, plus 2.5% on buy positions and minus 2.5% on sell positions (exceptions may apply). For more details on fees, including trading hours, please refer to our product schedule.

How many US stocks are available to trade at Axi?

Axi offers over 50 share CFDs, including many of the most popular companies across US, UK and European markets. Discover all the US stocks we offer below:

Start trading US share CFDs today with a live trading account at Axi.

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.