Our pick for international stock trading: Interactive Brokers
- $0 stock trade fee
- Access to 150 global markets
- Margin lending rates of 3.58% to 4.58% (with IBKR Pro)
We’ll break down each of these steps in more detail below.
Some of the major benefits of buying foreign stocks include:
If you want to buy foreign stocks, there are a few options to choose from.
The first is to invest directly in stocks listed overseas through an online broker that offers access to international markets.
Alternatively, you can invest in a global-themed exchange-traded funds (ETFs) or mutual fund that provides access to a basket of foreign stocks.
Another option is to invest in an American depositary receipt (ADR), which is a US bank-issued certificate representing shares of a foreign stock.
But for this guide, let’s look at what you need to do to buy foreign stocks directly through an online broker.
If you want to buy international stocks, you’ll need to find a broker that provides access to foreign markets. When comparing international stock trading accounts, consider the following factors:
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Once you’ve chosen a broker, you can open a trading account. If you’re opening an account through your bank, they’ll already have your details on file and you may be able to log in via your online banking portal. But if you’re a new customer, you’ll need to open a new account.
You can typically apply for an international stock trading account online in less than 15 minutes.
Application requirements can vary between different foreign share trading account providers. Generally, eligibility requirements for personal applicants will include:
If you’re a new customer to the stock trading platform, you’ll need to verify your identity before you can begin to make trades. Have the following information on hand when you start your application for a stock trading account.
Some brokers will require you to open one trading account for US stocks and a separate account for international trading. But because you’re already signed up to the broker, most of your information will be saved and buying international stocks should be simpler.
Now it’s time to deposit money into your account to cover the cost of any trades you want to make plus brokerage fees. You can transfer funds directly from your bank account, but keep in mind that the broker will need to convert your USD into the currency you want to trade.
The broker will charge a currency conversion fee for this transaction, so remember to factor this additional cost into your calculations.
Now you’re ready to start buying foreign stocks. When you log in to your online trading account, you’ll be taken to your dashboard, where you can check the latest prices, use filters to search for investment opportunities, and access market news and research.
You’ll also see the link you need to click to buy a particular stock. You can place a market order to buy the stock straight away at the best price available or a conditional order that lets you set specific criteria that must be met before you invest, such as the stock reaching a certain price.
The global markets available will vary between providers, so it’s best to check if a provider can access the particular stock exchange you’re looking for before you open an account. However, most international stock trading platforms will provide traders access to the following major global exchanges, plus more:
There are a few essential costs to consider when you trade international stocks:
Trading international stocks can incur different fees and commissions to what you would pay when trading American stocks. Here’s an idea of the fees you can expect to pay when trading stocks on the Tokyo Stock Exchange or the London Stock Exchange.
Provider | Tokyo Stock Exchange brokerage fee | London Stock Exchange brokerage fee |
---|---|---|
Fidelity International Stock Trading | JPY¥3,000 | GBP£9 |
Schwab Global Account | JPY¥2,000 | GBP£9 |
Interactive Brokers | JPY¥80 or 0.050% of trade value, whichever is greater | GBP£1 or 0.050%, whichever is greater |
International stock exchanges give you access to many more investment options than those listed on the US markets. However, it can carry a few more risks than the domestic market. This includes foreign exchange rate risk, liquidity risk and risk from changes in foreign governments.
As we mentioned earlier, buying foreign stocks directly isn’t the only way to gain exposure to international markets. Other options you might like to consider include:
Making big trades? Look for lower exchange rates, research tools that allow you to make more reliable investments and flat brokerage fees rather than percentage rates. Avoid low maximum limits, which might constrain your trading.
Making a lot of small trades? You may want to avoid flat fees that take a big chunk out of the potential profits of each trade and stick to percentage rates that will cost you less. Low maximums are less of an issue, but high minimums might be a problem.
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