Introduction

The US stock market occupies a dominant place among the top stock markets of the globe. Investors from different parts of the world try to invest in US  stocks. The Indian stock market also offers a huge space to trade and invest funds in stocks and other securities. Domestic companies provide sufficient returns on funds invested in stocks. In order to earn high returns with low risk, investors search for alternatives that can be used along with domestic investment.

As per diversification theory, allocation of funds in several types of financial instruments gives high returns as compared to investing in a single instrument. In line with the theory, investors approach foreign stocks and other securities for investment. Among various stock markets, the US stock market attracts investors to allocate funds. Investing and intraday trading in the US market from India is allowed as per the norms of both countries. According to the Liberalised Remittance Scheme of the Reserve Bank of India, you can invest up to a specified limit in the US stock market. Execution of trades in US stocks from India demands a systematic mechanism. Various participants play an important role in successful trading. These are overseas and Indian Brokers, US stock exchange, clearinghouses, and financial institutions. This article will assist you to know the process to trade in US stocks from India.

 Trading and investing in the US stock market

To gain a high rate of return with the lowest possible risk, investment diversification is a good option. Investment diversification refers to the allocation of funds in various types of financial securities. If you diversify your portfolio based on geography, then multi-country stocks can be used. Among developed economies, the US stock market proves to be an important destination platform to trade among Indian investors.

More than 4,200 US companies are listed on 13 stock exchanges of the US stock market. In these companies, you can trade in equities, bonds, derivatives, and other government securities. Along with the long-term investment, intraday trading in the US market from India is also allowed.  In intraday trading, you can buy and sell US stock on the same trading day to earn short-term profits. The long-term investment provides value creation for funds employed in the market.

After getting a brief conceptual knowledge about US trading, you need to understand the mechanism for long term investment and intraday trading in US stocks from India:

How to trade US stock from India?

The mechanism to buy and sell US stock from Indian brokerage houses would answer this question. If you are wondering about the procedure to trade abroad, you will be relieved to know that the trading process is quite easy and simple. Long-term and intraday trading in the US market from India demands certain requirements that need to be fulfilled. 

You need to follow 5 key steps for US stock trading from the Indian market:

1. Open an overseas Demat or trading  account

Like Indian stock market trading, US-based stockbrokers offer full-service trading accounts to Indian investors. You, as an Indian investor, can open a trading account with these overseas broker firms.  Along with overseas brokerage houses, several Indian firms allow you to trade in US stocks from India. These trading accounts with brokers act as a pathway for investment in financial securities. 

2. Documentation requirements

To open the above-mentioned account, you need to fulfill a specified documentation procedure. In this process, you are needed to upload relevant documents as your identity proof. Following are some important documents required, to open an overseas trading account:

• ID proof: Voter ID, PAN card, driving license, passport, and a valid photo.
• Address proof: Mobile bill, Utility bill, bank statement.
• Other relevant documents regarding income and financial information. 

Successful account opening with a broker gives you an investor ID that will provide you with a platform and gateway for intraday trading in US stocks from India.

Without any funds in the account, you wouldn’t be able to execute trading in the desired stock. Prior to searching for stocks, money addition is an important step.

3. Add funds to a trading account

How will you buy a stock without funds in your trading account wallet? For effective execution of a trade, add funds in the US market. An account requires some funds to buy some stocks. You can add money in your account with a single add money option.

4. Forex rates formalities:

To deal with the US stock markets, the Reserve Bank of India has made a quantitative limit under the Liberalised Remittance Scheme. Under this, Indian investors including minors can use only $250,000 funds to invest outside India. 

Before investment, you need to search for stocks up to this limit. By fulfilling some documentation formalities, you can use this scheme for investment.

5. Start intraday trading in US market from India:

Real and actual trading is the most important task in the US stock market. After opening your account and other formalities, you can buy and sell the stocks from India. You need to analyze the risk and return involved in stocks before selecting the trade.

These simple steps for US stock trading from India will ensure the smooth execution of trading transactions. You can earn and make more money by exploring your portfolio with US stocks.