How to Invest or Trade in US Stock Market for non-US Citizen?

NYSEThis post is the continuation of the previous post, “Why Should I Invest or Trade in US Stock Market?

There are two ways for you to invest in US Stock Market. The first option is invest via our local brokers such as RHB Investment Bank and the second method is to open an account with US based brokers.

I prefer to use the second option by opening an account with US based brokers. The main reasons I choose US based broker are, lower brokerage fees and less forex risk or currency exchange rate. This article will focus on that. If you prefer to invest via local (Malaysia) Stock Broker, you may want to look at “How to Invest in Overseas Stock Markets Easily“.

For comparison, our local brokers may charge about RM40 (~USD13.00) per trade while with US broker, the charges is as low as ~RM8 (USD2.50) per trade. Regarding forex risk, some of the local brokers you have to do currency exchange each time transaction is made. This is not the case if you are using US based brokers.

In the US, there are more than one stock exchanges. The most well known stock exchanges are the New York Stock Exchange (NYSE) and the NASDAQ. The NYSE is a physical market place while the NASDAQ is a virtual exchange. Other stock exchanges that exist in the US are American Exchange (AMEX), Boston Stock Exchange (BSE), Chicago Stock Exchange (CHX) and a few others.

Normally, when you open an account with US based brokers, you are allowed to invest or trade in most of the stock exchanges mentioned above through their online trading platform. The US Stock Exchanges opening hour is in between 9.30am to 4.00pm US/Canada Pacific Time (GMT-8).

I am using Sogotrade and Just2Trade because they have the cheapest brokerage fees and no monthly or yearly maintenance fees. However, due to lower fee, the trading platform that they provide are very minimal when compare Bursa Malaysia online trading platform. Other brokers such as MBTrading, provide better trading platform but their brokerage fee is slightly higher.

Sogotrade charges USD3.00 per transaction while Just2Trade charge USD2.50 per transaction. Since the online trading platform is very minimal, you can monitor real time prices at Google Finance, Yahoo Finance or Free JStock Software.

To open an account with US brokers is not difficult, can be done online. You have to submit signed form and a copy of your identification such as passport. Most of the time they accept the scan copy of the documents, and you can send it via e-mail.

Here are the summary on how to get started,

  1. Visit website or your prefer US based online brokers. I am usingΒ Sogotrade and Just2Trade.
  2. Find “Open Account” link and start fill up the form.
  3. Depending on brokers, print all applicable forms, sign and make a scan copy. The most important form for foreigner is W8-BEN form. W8-BEN form and passport copy are required as an evidence of non-residence status.
  4. Send all signed documents together with copy of identification by e-mail.
  5. Wait for account opening confirmation e-mail.
  6. Deposit cash to your trading account either by Wire Transfer, Checks or ACH Transfer.
  7. When cash deposit cleared, you can start to invest or trade.

There are many other US based brokers that allow non-US citizen or resident such as MBTrading, First Trade and Zecco but their trading fees are higher.


100 comments… add one
  • Great advice for trading in US stocks… What about shares in London? I am keen on FTSE AIM shares, do you know of any broker/site that offers online facilities?

    Reply
  • Hi there,

    I too am rather keen to expand my investment to different markets. And I have been studying the various brokers out there. Thanks for your very timely sharing on the matter.

    Cheers,
    james

    Reply
  • Hi, do u experience any problems with sogotrade or just2trade?

    Recently my friend in malaysia open an online account with sogotrade?After my friend transfer his money, they didn’t fund his account.It has alrdy been 3 weeks. Email to them went unanswered.

    Do u know anyone who experienced this difficulties before?

    Are u an active trader/investor in the US market?

    Reply
  • Hi Chris,

    Sad to hear your friend’s problem. Try to call them by phone.

    Yes, I am active trader in US stock market but currently I only ussing Just2Trade. I didn’t use Sogotrade for quite sometimes now. Previously I did fund my Sogotrde account & do withdrawal a couple of times. No problem. All went very smoothly. But I fund by using my US bank account.

    Reply
    • Dear Millionaire, U did say that u’re using US bank account for transaction. So, can I open one? and how? same procedure like in malaysia? need to come to the bank. Or can I just open one account with foreign bank at malaysia such as citibank, standchart or hsbc?

      Reply
  • Hi naim, I open my USA bank account when I was in USA a few years back. To open USA Bank account for foreigner is not that easy due to USA Patriot Act.

    The best way is visiting the bank itself if you manage to find a way to go to USA.

    Reply
    • Hi i have been going through your information and i have for it very informative. Can you tell me the procudre for creating a US bank account. i will be in the US within the next few weeks.

      Thanks
      Chris

      Reply
      • You just need to be at the bank in Person with your passport. Normally, the officer at the bank is very helpful.

        Reply
  • Hi,

    Thank you for a well summarized explanation on how to invest in the US stock market for non US citizens. I would just like to know how to link up my malaysian bank account to the trading account i have opened (with Zecco), and if it’s not possible, how would I receive my returns if I were to use the wire transfer method?

    Thank you for your time.

    Regards,

    Robert

    Reply
  • Hi Robert,

    I don’t have Zecco account but normally you can’t link Malaysia bank account. If need to do fund withdrawal to Malaysia bank, normally you have to fill up form & specify your bank details.

    Reply
  • let say thet you live in europe and you have account in some bank in europe. what will you do to transfer money to just2trade? what bank will you choose?

    Reply
  • Nenad,

    I think you can use any bank that you have as long as you can do the transfer easily. Transfer via internet banking is one of my choice.

    Reply
  • Leading economist in the US market claims that the US stock market has the potential to rise over 50% in the next couple of years. He recommends buying options, or to be fully invested in stocks but buy protection through out of the money put options, for example S&P puts.

    Reply
  • Hi,

    How much deposit to open an US bank account?How many days it will take?what documents need to be presented?

    which US bank would you recommend?I believe most of them provide internet banking,rite?

    what is the advantage of funding trading account through own US bank account compared to wire transfer from m’sia bank account?which one will incur more transaction fees?

    I’l appreciate your input on this.Thank you

    Reply
  • sam,

    To open US bank account, the best method open while you are in USA. Some people said that can be done without going there but I don’t know it is going to be successful. Minimum deposit is depending on bank. Citibank or Bank of America are good.

    The advantage of funding via US bank account is there are zero fees for transaction via ACH (between bank & broker)

    Reply
  • Hi,

    How about the taxation of each trade? from what i understand, the trades arent taxed but this sounds too good to be true. can someone shed some light on this?

    Reply
  • Why do you need to open foreign bank account just for stock trading when there is bank in Malaysia can performs the same thing? Example, i use CIMB i trade to buy stock in US or Singapore.

    Reply
    • CIMB charges are so much higher….

      Reply
  • Eng, open foreign bank account is not necessary but open foreign trading account for cheaper brokerage fees as I stated above.

    Reply
  • I am using ETRADE and i can say it’s the best. However the charges are quite expensive. Try to opt for Optionhouse and Scottrade for cheaper charges.

    Reply
  • What about the Tax tariff for non-us citizens? is there any on the profit of sell order? how should be paid? where?

    Reply
  • Montana, there is no tax on profit or sell order.

    Reply
  • Did you read the instructions for Form W-8BEN, Tax at 30% rate on income

    Reply
  • Sorry, I did not see that in my from.

    Do you mean that you write in 30% in section 10 in W-8BEN form?

    Reply
  • Download the instructions for Form W-8BEN,

    Reply
  • Hi Thank for the info. This is what I’m currently searching for. I have 2 questions. Firstly, transfer fund is quite easy, how do we do the withdrawal? Secondly, since i’m going to NYC next week, may be I can open a US ac there. Can you advise firsthand what doc i should bring? Thanks

    Reply
  • wj, for withdrawal you just need to put in request. If you going to US, then it is very good. open bank account and it make your investment in US very easy. All the process of depositing and withdrawal to your trading account will be online.

    Reply
  • what is the minimum trade for stock exchanges in US? The price is so expensive

    Reply
  • Alan, the minimum is only 1 unit. No problem to buy expensive stock.

    Reply
  • Hi, is there anyone banks or financial institution in Malaysia provide Medallion guarantee Stamp? I need it for transfer US stocks.

    Reply
  • hi everyone

    i have learnt that there is greater potential in US NYSE compared to local Bursa
    im currently staying in Malaysia
    i wish to begin ownership of US blue chips etc INTEL…..
    Pls advise how do i get started?
    TQ

    Reply
  • NewBie, just follow my short guide above or you may want to trade through local stock broker company such as HLeBroking or CIMB

    Reply
  • What kind of taxes (rates and type) will a non U.S. resident incur by the IRS for trading online in the US market?

    Reply
  • hi…great blogsite, very informative. on yr recommendations i was about to open an account with just2trade but decided to google for reviews on their service…one trader mentioned that his cash balances are sometimes wrong…this is quite worrying since i’ll be trading from here in Malaysia and will have no recourse to this broker if anything goes wrong…have you ever experienced anything like this with them?

    Reply
  • Hann, I never experience any problem. Maybe that trader mention the period between the selling taking place & money credited back to the account. It just some delay.

    Reply
  • Just wanted to know, do I need to pay initial deposit?

    Reply
  • To open is free but you need to have a deposit to start trading.

    Reply
  • Hi, I am interested in US trading options. But just called OSK, they US Options is not available.

    Need advise, how can I start in Malaysia ? Any good reliable broker ?

    Thanks

    Reply
  • Beginner, you can register with US based broker.

    Reply
  • I opened an account with Zecco.com but can’t deposit my fund as it is quite difficult to do wire transfer from my country Bangladesh. Is there any other alternative way to transfer my fund? Can my relative in the USA deposit the fund from his bank account to my Zecco account? According to Zecco and other brokers who provide international trading account, they don’t accept cash, third-party checks etc. Please give me some advice and suggestion on it.
    Thank you.

    Reply
  • hi

    what’s your experience/knowledge about interactive brokers?

    paintballtao

    Reply
  • Hi,

    Based on your recommendation, I have opened a Just2trade account.

    But until recently, I realized that the Tefra Withholding took around $500 from my account balance due to the 28% backup withholdings.

    I thought I have signed the W8-BEN form and all taxes should be exempted.

    I am just a student and please help me out on this issue.

    Really appreciate it!!

    Reply
    • Leo, I never encounter this problem before. Anyway, I open my account 3 years ago. May be you could ask them about the tax.

      Reply
  • Any malaysia trading US penny stocks which every one avoid.

    Reply
    • hi arvind, did you do US pennystock from msia in the end?

      Reply
  • Hi,

    By filling up W8-Ben form does that means i’ll get a tax exemption from CIMB investment bank? Any feedback is highly appreciated. Thx

    Reply
  • how about invest in us option?

    Reply
  • hi,

    I just want to appreciate the time you took to create this site. great info, very well detailed. I had an account with Sogo. I want to know if I have a ITI(tax id number) but im out of the country of USA. will it be better just to applyl with W8(tax exempt) correct, when you transfer your money from the brokerage to your account in your country. which is ones cost less sogo or jus2trade?

    Thank yuo

    Reply
    • hi Alex,

      1. I’m not sure about the tax in the US. For me I just use W8 form.

      2. I never transfer money from trading account to my account in home country. I use my US bank account for all transaction.

      Reply
  • Thx for the great blog.
    Tax question again:
    1-Are u saying that you brokerage firm does NOT withhold any taxes from your account?
    2-Did u receive profits or dividends from your investments in the past 3 years?
    3-Did u transfer any profits/dividends back to your US bank account or a non-US bank account?
    4-Form W8 gives u a tax exemption because you are not a US resident?
    thx

    Reply
    • Tommy, I just do short term trading & did not received any dividend. So, I don’t really have any experience on Tax issue.

      Reply
      • Thanx for your reply;
        Since u do short term trading then u make profits, therefore, they do not with-hold a portion of your profits as taxes?
        I just called “interactive brokers” and they said they have to with-hold 30% of profits for taxes just like any other US based broker since its the Law. (but they added that I can get some tax refund from my home country IF there is a tax treaty between the US and my country)
        I wanna know how u get around this.

        Tx

        Reply
  • Hi,

    Awesome recommendation. As I am keen in option trading, which US-based online broker would you be recommending? Sogotrade and Just2Trade?

    I prefer lower brokerage fee broker.

    Thanks.

    Regards

    Reply
  • thank u so much…………….. very informative blog, i have been looking for names of online brokers who allow non residents to open accounts, this helped a lot πŸ™‚

    Reply
  • if u could please mention more online brokers in ur reply who allow non residents and non citizens to open account i shall be thankful…………………….

    Reply
  • hi ,
    just gone through the whole discussions and of course the blog ! i would like to brief the discussions key points and request you to please Check .

    so here we start :
    yes there is an option for foreign nationals to invest in US stock market for that u have to open an account with some US based broking firm , with some small fees . then sign a W8-BEN form for some tax reductions (if not completely free) have a valid bank account (better if US based) and start investing . but people are finding some problems like
    Uninformed tax deductions , Problems with money transfer , and ways of finding better options in order to get hassle free cash deposit and profit money transfer in non US based bank account

    IF you could answer these question then i suppose this website of yours would be the most recommended

    thank you
    have a nice day

    Reply
  • Hello, Can Non US Nationals invest in US Penny stocks?

    Reply
  • Hi,

    What is the minimum unit we can invest in US share market? 1000 unit(1 lot) or 100 units?

    Thank you
    Jen

    Reply
  • so how to do non-resident open bank account in US? Which bank in US allows non-resident.

    Reply
    • You have to be present at the bank in person to open US bank account.

      Reply
  • Great Info.Thank you.
    I would like to know how long a non-us resident can hold US stocks?Is there any pre-defined period like 1 yr or something?. or an Investor can hold as long as he wants to? i am asking this because my trading site has a column which shows the period.lightspeed webtrading. please detail me.

    thanks in advance.

    Reply
  • I m an indian day trader and I want to open accout with us broker ,just I wanna know that what will be the minimum capital too open accout with us brokers (ans it in dollars plzz)

    Reply
  • Hello

    I am from Bangladesh, I am interested to invest some money os some US companies like apple facebook and google, But budget is not much its about $500 only.

    I was using etoro before but I don’t understand there system much, Could you please suggest me a online stock treader who will be good for me ?

    I just need a simple system ehere I can invest my money and operate it easily.

    Thank You

    Reply
  • Same here in Peru. The local stock brokers(ie: the peruvian banks) charge a lot of money per transaction. But the worst part is that they want to have a percentage of your earnings as well.
    There is much monopoly still inPeru. I will trade via etrade.

    Reply
  • Hi Sir,
    im interested to open a trading account based in US, im from Malaysia.
    1st of all is to open an account. But after that, how do i transfer the money to buy the share? and how the broker going to transfer the money back to me? So far i have account in CIMB, PBB, UOB and Maybank. Which bank is more convenient?

    Thank you

    Reply
  • Hi Sir,

    Been a reader and fan of yours for a while. Thanks for all your sharing.

    Are the three lowest cost online brokers you know are Sogotrade, Just2trade and MB Trading? I’m planning to dip my toe into US ETFs soon and taking a look at which broker to use. Just wondering if you had any new online brokers to recommend (as this article was written a while back) — or if you’re sticking with your first recommendations πŸ™‚

    Thanks very much!

    Reply
    • Hi Aaron Tang, TQ for your continue interest in 1mdb.com.

      Honestly, I don’t do much trade in the US stock market lately but I do trade once in a while. Now, only use Just2trade account, don’t really have time to explore other brokers.

      Reply
      • Thanks a lot!

        Reply
        • hey aaron, have you started out US stock trading yet? I’m kinda lost. reading the article is helpful but still a nit lost

          Reply
  • Hi,

    Thanks for the informative article. Just wondering if you are familiar with short selling US shares, as I am currently exploring all methods for short-term trading. I understand that you are allowed to do it there. But do you know if we can do it here if we open an account with a Malaysian broker? Or do we have to open with a US based broker to utilize this facility? Thanks!

    Reply
    • I have such an account. I don’t think it is allowed from Malaysian brokers. The one i am holding specifically disallowed it. You will have to find other brokers, or US based broker that do allows such a trade.
      Although there are stocks you may want to short, there is another way of doing that, by buying the would be winners out of that industry. Short has time limitation and significant risks, while simply holding does not.

      Reply
      • Hi Sharif,

        Do you know any brokers out there that can open a Malaysia account?

        The ones I applied for all said they don’t do for Malaysian citizen.

        Regards

        Reply
        • OSK-RHB will allow you to open one in overseas countries. Other Malaysian brokers that have overseas presence may also allow you to open one.

          Personally, I prefer to use CIMB Itrade which is worldwide trading as describe in this article which i wrote previously in this very site. Search for “invest overseas stock easily”

          Reply
  • Hi 1MDB,

    I really like your blog and inspired to trade but Sogotrade has a new regulation making Malaysian unable to open an account. Just2Trade doesn’t respond at all.

    Any other online brokers out there that has low minimum in to begin trading and low fees?

    Thanks in advance!

    Reply
    • I came across the same issue, I went to check all broker websites suggested by you & all rejected me the moment I tell them I’m from Malaysia.

      Any other broker website you can suggest ?

      Reply
  • This is so great – you just made it so simple. thank you

    Reply
  • Your directives are the best I got so far.But I’m really wondering,I mean how much do I need to have in my US account in order to start trading.

    thanks
    Joseph.

    Reply
  • But i do not have passport yet? what should i do?

    Reply
  • Hi 1MDB( just like our recent fiasco but yours has been in used since 2010)

    Thank you so much for your blog. My question is I will be having some NYSE shares in a few months time how do I go about selling these shares. I will register etc with US broker and do I need to have some money in my trading account before my released shares are deposited. Can they deduct charges from the sale of my shares. Sorry I am a newbie in shares. Thank you.

    Reply
    • 1mdb.com has nothing to do with 1mdb.com.my πŸ™‚

      Regarding your question, if you will be getting some shares from the NYSE, you have to check with your shares provider the broker to use. You can’t simply open account with any broker & expect you shares to be in your account. Normally, if you have shares, don’t need to have deposit, Salse charges always deducted from the sale of shares.

      Reply
  • How to make the deposits via wire transfer to my trading account?

    Reply
  • Is this possible from Bangladesh? I mean I’m From Bangladesh and can I invest through just2trade ?

    Reply
  • Hi and thanks for the advice.

    if you had to choose between J2T and sogotrade which would you pick? sogotrade looks to have the better trading tools- do you agree?

    Thanks
    Simon

    Reply
    • I change to Interactive Broker. Cheaper brokerage fee. Starting from $1.

      Reply
  • I’m malaysian and currently residing in malaysia.
    Can you recommend some US based online brokers that offer option trading
    that accept malaysian as customers.

    Reply
  • Thanks for the info on investing in the US…can you tell me if I would be paying any tax on my dividends received….Please advise….Paulene

    Reply
  • Only short term fools would open a foreign stock trading account. What happens if something happens to you and you need the cash? Good luck trying to get your money back! This happens to a friend I know.

    Reply
  • Dear all,

    I want to share how to claim US dividend 30% tax refund. refer to my blog link
    Others info like how to telegraphic transfer and remittance fund back to Malaysia, find out more in http://aliinvest.blogspot.my

    Reply
  • can we do intraday trading in us from india

    Reply
  • Hello,im from malaysia …do firstrade, sogo trade still accept malaysia customer nowsdays ? Im a very small trader πŸ™‚ and i have 1 question…when i withdraw money from US broker back to malaysia…is there anything i need to do ? Like income tax those things…

    Reply
  • Hi…
    If i wanna draw out of profit from trading
    .how do i do that if i open oveaseas account?
    Plzzzz advice.

    TQ

    Reply
  • Hi…
    If i wanna draw out of profit from trading,HOW TO DO IT?

    Plzzzz advice.

    TQ

    Reply
  • Can i trade penny stock with sogotrade and just2trade?

    Reply

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