Investing in the US (Part 1) - ToS & TW

Preface

My investment journey in the United States of America (US) is nearing to the one year mark as of now.

The US stock market is one of the most active markets in the world. On the same note, there are also a lot of platforms / brokerage that offer the opportunity to invest in the US market.

It took me some time to venture into the US market mainly due to unfamiliarity.

This will be a two-part post due to the length of the content.

First part will share about why I invest in the US and how I do that (with snapshots)
Second part will share about my 1 year returns to date (>40%) and how I managed to achieve it

Story of why invest in the US

On an average day of an average week, I wake up and freshen up. I squeeze the toothpaste out of my Colgate-Palmolive (NYSE: CL) tube onto the toothbrush.

As I sit down at my work desk at home (due to the pandemic), I opened up my Lenovo laptop and fire up my desktop as well. Yes, two computer equals double the efficiency, supposedly. My desktop PC holds an Intel (NASDAQ: INTC) chip within it and also a used-to-be powerful graphic card from NVidia (NASDAQ: NVDA). Both computers are powered by Microsoft (NASDAQ: MSFT).

As I worked, it is unavoidable to perform countless searches on Google (NASDAQ: GOOGL) and take short breaks by switching up Facebook (NASDAQ: FB) to look at funny videos.

Speaking of Facebook (& Instagram), please like, follow and share BTM's Facebook and Instagram! Thanks for your support!

Nowadays, I’ll also be constantly hoping to hear good news about any vaccine produced for the COVID virus. Gilead Sciences (NASDAQ: GILD), Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) keeps popping up in the news.

As I get busy at work, I’ll probably call in delivery. A quick one I can think of is probably McDonald’s (NYSE: MCD) and for sure it’ll come with a Coca-Cola (NYSE: KO) in the set, even though I don’t want it.

At the end of the day, I’ll wind down with some entertainment either on Netflix (NASDAQ: NFLX) or re-watch some old nostalgic “Let it go” cartoons from Walt Disney (NYSE: DIS).

You get the idea now

Our lives are filled with many products and services of companies that are listed in the US. What I mentioned above is just a short snapshot. I’m sure anyone of us can think of many more such examples.

First thing I mentioned in my simple defensive investment principles is to know the company and business. We can easily be spokespersons of these products that we use so frequently

Here are the 5 main reasons why I prefer to invest in the US compared to MY.

Selecting the broker platforms

We will need to pick a platform to invest in the US. There are so many platforms… So “which one is good for me?”

Over the past week or two, I’ve been seeing a lot of articles/videos covering the comparisons between platforms. Here are some of them (got more out there):

Dividend Magic take on eToro
No Money Lah by Yi Xuan take on Tiger Brokers
Suyin Invests compared a few platforms and picked TD Ameritrade (Video)
Ringgit Freedom also compared various platforms and chose TradeStation Global as the core platform
Ziet Invests also has a comparison of a few platforms and decided on TradeStation Global (Video)

As for me, I use TD Ameritrade (the platform called Think or Swim) and Tastyworks (which is developed by the same developer of TD’s platform).

For those who are looking at either of these 2, I’ll be sharing on these 2.

Both platforms charge $0 commission for buying stocks. However, there are some good differences when trading options, which I’ll touch on.

Now, on to the platforms.

TD Ameritrade’s Think or Swim (ToS)

Source: TD Ameritrade

Introduction

TD Ameritrade was founded in 1971.

In October 2020, Charles Shwab (a listed financial services firm with banking functions in the US) acquired TD Ameritrade.

TD Ameritrade is a listed company in the US with the ticker AMTD. They also have a Singaporean branch and website to support its Asian operations.

Opening account and funding

Opening an account with TD can be done online. Singaporeans can visit the office, if you want to.

I heard it is currently taking forever (1 month or longer) to open an account with TD so you might need to be patient. I opened mine a year ago and it was done within a week.

You will notice that the process involves a lot of T&C and declarations and documentation proofs. This is a good thing, as it takes each account opening seriously with its security measures and risk control.

Funding the account requires the transfer of funds to TD’s account. There is no minimum of how much we are required to transfer into the account to start using it.

For Singaporeans, you could just transfer to their DBS bank account. For Malaysians or other countries (non-US), we will need to do an overseas / wire / telegraphic transfer into their US bank account.

When I did my transfer, I incurred a $25 fee by Wells Fargo / TD (+) RM10 charge by Maybank TT fee. The funding gets reflected rather quickly for me – within 2 to 3 days.

If you need the exact instructions on how to transfer online, do drop an email to their support email and they will get back to you swiftly. I asked them for instructions to transfer from Maybank and they sent me a very helpful snapshot.

Navigating the platform

The trading platform is available on Web, Desktop and Mobile. I mainly trade using its Desktop version. You can download the application from its website.

Its a rather powerful platform with loads of features and takes time to get familiar with. Take the time to get familiar with it.

I’ll share the few functions on the platform that I use.

Trading Screen

This is how the desktop platform looks like.

This is showing the main trading screen (“Trade” tab –> “All Products”). To buy / sell the stock, I just need to click on the Bid X / Ask X number and it will bring up the trade order form. For option traders, make sure to adjust the “strikes” to “ALL” and we’ll be able to see the entire chain of options and pick the ones we’d like to trade.

Side panel: The left side panel is customizable to our own needs where we can add and remove widgets as we’d like. I like to have the following:

Account info – I can see how much is in my account
Watchlist – Easily navigate my watchlist and see how it is performing during trading hours
Quick chart – Shows me the chart of the stock that I am looking at now
Scratch pad – Just in case I need to put down notes when I am researching

Bonus tip: Check out the red coloured numbering on my watchlist (Next to “Observe”), quick chart (Next to the ticker “KO”) and also on my main trading screen (Next to the ticker “KO”). This is a function to link up all these different parts together. I could click on any stock in my watchlist and the quick chart & main trading screen will switch to the stock instantly.

Active Trader

Another fun way to look at stocks is to utilise the “Active Trader” sub-tab under the “Trade” tab. Here you can see the chart on the left side together with the movements of the pricing and orders on the right side.

Chart for the Technicals

ToS also has a very robust charting screen for the Technical Analysis enthusiasts. Pick and choose from the long list of available patterns / studies.

Scan Feature (MUST USE)

Built-in the platform, ToS offers a scan feature so that the user can scan for a list of stock that fulfills the user’s criteria for investing. We can scan for anything from stock price, valuation, fundamentals (margins, ratios, etc) to even technical studies / patterns.

I love this feature a lot as it helps me to scan through the big market to just a short list of companies that fits my comfortable characteristics.

Market Watch

A feature that gives a feel of the market. I use it to identify any oversold shares from my watchlist as it will be quite evident with a big red bar.

Commissions

Main highlights:

No fee for stocks and ETFs
Options at only $0.70 per contract
No fee for closing of any sell options for less than $0.05
On top of that, there is no assignment fees for option traders, which is a big thing!

BTM’s View

It is a very powerful platform with a lot of features that can assist any investor / trader to navigate the stock market. The downside of the platform is that it can sometimes be slow to load or lags on my 7 year old computer.

This is the first platform that I used to invest / trade in the US. I am still using this as my main platform. I do all my studies and stock picking on this platform.

Other than the slow load time to start up the platform, I’ve been enjoying this platform very much.

They have a pretty good support team and you can also ask them to give you a tutorial of the platform if you need help navigating the different functions.

When I first started using this platform, they had a higher commission structure and only changed mid-2020. That’s why I used Tastyworks to supplement my trades, but now ToS’ new commission structure is very competitive!