Ever wanted to buy Apple, Google or Amazon stocks? Well, now you can with as little as $100. But both Google and Amazon shares cost around $1000. What can I do with $100? Well, thanks to trading platforms like eToro you can easily start trading US stocks and make money from their profits and losses.
How does it work?
The process is called CFD trading, which stands for a contract for difference. It allows you to trade an asset without actually owning it. So technically you’re not owning Apple stocks, but participating in the price movement.
Let’s say you have $100 and a Google share is $1000. You can buy 0.1 units of Google shares with CFD trading. And if the Google price goes to $1050 you make a $5 profit.
But most platforms allow you to leverage your investment. For example in eToro – the trading platform I use – you can leverage 5 times your investment. So for $100 you can buy $500 worth of Google shares, which is 0.5 units. So if the price goes up to $1050 you can make a $25 profit.
But higher leverage means higher risk as well. Without leverage, if the price goes down to $950 then you lose only $5. With 5 times the leverage if the price goes to $950 you lose $25.
How to Start Trading US Stocks?
As with any stock market, you need a broker. I personally use eToro and highly recommend it. It’s easy to use and you can trade online using their web app or the mobile app. Importantly, you can set price alerts so you get notified when a stock price moves in a certain direction.
This is important for few reasons. I trade only a few high performing stocks. Namely Apple(AAPL), Facebook(FB), Amazon(AMZN), Alphabet(GOOG). These have performed well for a long period of time and in my opinion, will continue to perform. So whenever these stocks fall a certain margin then it’s a good time to buy them. I personally look for drops below 3%-5%.
This is my personal strategy and has given me some good gains in the last few months. If you’re new to trading stocks I would suggest you stick to those four stocks. It’s unlikely you will go wrong with them.
Let Others Trade for You
Can’t be bothered to set up alerts and look for price movements? Then you can get others to trade for you. eToro has this awesome feature called copy trading. This way you can copy trades of successful traders. So you can analyze people who have performed well in the last few months and start copying them.
I will add a post explaining how copy trading works in the near future. In the meantime, if you want to make money from trading stocks then go ahead and join eToro. If you want to read more about eToro then check out my eToro review.
I will also talk about trading currencies like BitCoin, Ethereum etc too. So stay tuned to the blog by following me on Twitter or Facebook. If you have any question don’t hesitate to ask them in the comments section.
Frequently Asked Questions about Trading US Stocks
After I first published this article I got quite a few questions via Facebook and Twitter. Instead of replying to them individually I thought of adding this section. Hopefully, this will answer your questions as well.
- Do I need a US bank account?
No, you don’t. You are not actually buying the stocks. You’re trading on the price difference. So all you need is an eToro account and some money in that account.
- Do I get paid dividends?
No, you don’t. As mentioned above you don’t own the shares so you don’t get paid any dividends.
- Can I hold onto the stock indefinitely?
You’re doing CFD trading, which stands for a contract for difference. The contract will expire after some time. When the contract expires all your open positions will be closed automatically.
- Is this a good long term investment?
Probably not. As mentioned in the above question the contracts do expire after some time. So, Anyway you can’t hold onto a position for a long time. Also, you need to pay fees to hold onto an open position. So if you hold onto a position for a long time you will end up paying a considerable fee.
- How much can I make per month?
All trading involves risks. Same applies for trading US stocks. If you’re careful and stick to proven stocks then you have a good chance of profiting from trading. I would say on average you will get around 2%-5% per month if trade properly.