US Stock Rules
Pre-market and after-hours, T+1 settlement, the PDT rule, circuit breakers and LULD, fractional shares, the costs behind zero commission and dividend withholding tax: get them straight before your first US stock order.
For: Beginners about to buy and sell US stocks through a broker, or who have just started trading US stocks
This course uses ideas from the courses below (optional; you can start right away).
- 1
Pre-market, Regular Hours and After-Hours
No sign-up neededRegular US trading hours are 9:30–16:00 Eastern Time, with pre-market and after-hours sessions on either side; converted to Asian time, daylight saving and standard time differ by 1 hour.
6 min - 2
T+1 Settlement and Cash Accounts
Text versionUS stocks bought today can be sold today, and the cash and shares settle on the next trading day; in a cash account, buying with unsettled money and then selling is a “good faith violation”.
6 min - 3
The PDT Rule: Limits on Day Trades
Text versionA margin account that makes 4 or more day trades in any 5 trading days is flagged as a PDT and needs at least $25,000 in account equity to keep going.
6 min - 4
Circuit Breakers and LULD
Text versionIndividual US stocks have no daily price limits, but a 7%, 13% or 20% drop in the broad market triggers a circuit breaker, and a stock that breaks out of its LULD band is paused for a few minutes.
6 min - 5
Buy from 1 Share, and Fractional Shares
Text versionUS stocks have no lot requirement, so you can buy just 1 share; many brokers also let you buy fractional shares by dollar amount, so a few dollars can own a slice of an expensive stock.
5 min - 6
The Costs Behind Zero Commission, and Dividend Withholding Tax
Text versionZero commission isn't zero cost: there's still the bid-ask spread and small regulatory fees on sales; dividends to non-US residents are withheld at 30% by default, reduced under a tax treaty once you file a W-8BEN.
6 min