How to buy stocks in the US market

Interested in diversifying your investment portfolio beyond local markets?. While our local banks provide options for you to do so, it’s limited and you need to source your own US dollars to open an account. During the pandemic I was able to find an alternative; it isn’t perfect but I prefer this option rather than going to a bank. It is also important to note that this guide is not for active trading but for long-term investing.

The trading platform I chose is called Interactive Brokers and they allow non-US residents to trade stocks, ETFs, options and cryptocurrencies. You also have the option to trade from the website or mobile app and the user experience is far above anything local banks will offer. So let's get started with what you will need.

• Your Tax Identification Number or BIR,
• Bank account and wire transfer information for your bank,
• ID card or driver’s license and bank statement/proof of address,
• Postal code.

Sign up for an Interactive Brokers account

Go to their website or sign up using my referral link Create Account. Save your login information and security questions, it is important that you do not forget this. Write it down or save a screenshot.

Account configuration

When given the choice for what type of account you want, be sure to choose ‘account type individual’. Create a cash account and not margin. Trading on margin is essentially using a loan from the broker as leverage to make trades. This can allow for bigger trades and larger profits but also bigger losses, therefore I recommend using your own money when trading. Interactive Brokers will ask for your financial information, such as your net worth and source of income. Try to answer this truthfully and be sure your net worth is more than your liquid net worth.

Funding your account

The main way you will be funding your account is through wire transfers. This can be expensive due to the fees determined by your bank and conversion rates. Therefore it is important that you limit the number of transfers and send money in large amounts as the fees will add up.

There's also the issue of forex availability. Your local bank may have limitations on how much TTD you can exchange at a time.

To fund your account, navigate to the funds tab and follow the instructions. You will first need to notify IBKR about the payment being sent, obtain bank routing details from IBKR and then initiate the transfer using your bank. Be sure to enter the correct banking information.

Placing a trade

To place a trade, navigate to the trade portal on your mobile app or desktop and specify the order type.

Limit orders- A Limit order is an order to buy or sell at a specified price or better. The Limit order ensures that if the order fills, it will not fill at a price less favourable than your limit price, but it does not guarantee a fill.

Market orders. A Market order is an order to buy or sell at the market bid or offer price. A market order may increase the likelihood of a fill and the speed of execution, but unlike the Limit order, a Market order provides no price protection and may fill at a price far lower/higher than the current displayed bid/ask. Please note that large market orders may be split into smaller orders, which will be traded over time.

MidPrice order. The MidPrice order is designed to split the difference between the bid and ask prices, and fill at the current midpoint of the security or better. Set an optional price cap to define the highest price (for a buy order) or the lowest price (for a sell order) you are willing to accept.

These are the basic orders you will need to know for long-term investing in the market.

Now you are ready to dip your toes in the world of investing. So set up your account, fund it and start making some trades. Remember to use this link to sign up for an account. Create Account