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Overview ‐ Using Alpaca for US Stock & ETF Trading with Automation

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ai-lab-projects edited this page May 4, 2025 · 1 revision

Alpaca is a US-based, commission-free trading platform offering powerful APIs for both real and simulated (paper) trading. It supports a wide range of US stocks and ETFs, making it an excellent choice for algorithmic trading, research, and portfolio automation.

✅ Key Features

  • Supports both US stocks and ETFs
    • Example tickers: AAPL, TSLA, SPY, QQQ, VTI, ARKK, etc.
  • Commission-free trading
  • Realistic simulation environment (Paper trading)
    • Same API structure as real trading
    • Great for testing strategies with zero financial risk
  • REST API compatible with Python, GAS, Node.js, etc.
  • No need for US residency to open an account

💸 Real Trading Considerations

  • USD Deposit Required
    • To start live trading, you must fund your account with US dollars.
  • Use Wise for international transfers
    • Much cheaper and faster than traditional bank transfers from other countries.
  • No interest for idle USD balance
    • Funds are not treated like a savings account or foreign currency deposit.
  • No automatic tax withholding
    • Users must self-declare capital gains or dividends in their country of residence.

📈 Strategy Tips

  • ETFs with low dividends are preferred
    If you do not incorporate dividend income into your reward function (e.g., for reinforcement learning), ETFs with low or no dividends may be more suitable for applying your models.

  • End-of-day trading vs. intraday trading

    • Easier to train models like DQN on daily close prices due to less noise.
    • Alpaca also supports minute-level data for more advanced (but noisier) strategies.

🚀 Why Alpaca?

Feature Description
🧪 Paper Trading Safe sandbox with real market data
🔁 API Integration Easy to automate trading logic via REST
🌎 Global Access Available to users outside the US
💵 Cost Efficient Commission-free + low transfer fees via Wise

📝 Additional Notes

  • Alpaca is a FINRA member and SIPC-insured US broker-dealer.
  • Paper account is great for evaluating strategy performance before risking real money.
  • Suitable for building and sharing open-source trading bots on GitHub.

→ Ready to start? Try the Paper Trading environment first. It's totally free.

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