There are many foreign stocks that trade on U.S. stock exchanges or are available to be purchased over the counter in U.S. dollars. However, there are thousands of great companies around the world you can't buy directly on major U.S. exchanges. Investing internationally can open up new opportunities and help diversify your portfolio. If you want to invest in a stock that isn't available on a U.S. exchange, you'll need a broker that gives you access to international stock exchanges through its platform.
Here's what you need to know before choosing an international broker. We'll also give you our picks for the best brokers for international trading to help you get started.
| Broker/Advisor | Best For | Commissions | Next Steps | |
|---|---|---|---|---|
Interactive Brokers Rating image, 4.0 out of 5 stars. 4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.0 out of 5 stars. 4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Best For: Experienced international stock investors who want to keep expenses to an absolute minimum. | Commission: As low as $0 stock trades | Open Account for Interactive Brokers |
Fidelity Rating image, 5.0 out of 5 stars. 5.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 5.0 out of 5 stars. 5.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Best For: Investors who want a full-featured brokerage experience, but don't want to open a separate account to trade on international exchanges. | Commission: $0 commission for online U.S. stock and ETF trades | Open Account for Fidelity |
Charles Schwab Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Best For: Investors who love the full-featured experience of Schwab's investment platform and want the ability to occasionally buy and sell stocks directly on foreign markets. | Commission: $0 stock and ETF trades | Read Review |
How to choose the best international trading platform
To help start your search for the best brokers for international trading, here are a few questions to ask yourself:
Open Account for Interactive Brokers
OnInteractive Brokers'Secure Website.
Compare the Best International Brokers
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- Experienced international stock investors who want to keep expenses to an absolute minimum.:Interactive Brokers
- Investors who want a full-featured brokerage experience, but don't want to open a separate account to trade on international exchanges.:Fidelity
- Investors who love the full-featured experience of Schwab's investment platform and want the ability to occasionally buy and sell stocks directly on foreign markets.:Charles Schwab
Ratings Methodology
Our Rating:
Rating image, 4.0 out of 5 stars.
4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Interactive Brokers has the largest selection of foreign markets available by far. Commissions are priced on a per-share basis and are almost always the lowest in the industry for international trading. Currency conversion fees are also far lower than the competition -- at 0.2% for most cases. The downside is that Interactive Brokers has a less feature-packed platform, especially when it comes to educational and research materials for newer investors.
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Fees:
As low as $0 stock trades
Account Minimum:
$0
Open Account for Interactive Brokers
OnInteractive Brokers'Secure Website.
2023 Award Winner
Our Rating:
Rating image, 5.0 out of 5 stars.
5.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Fidelity offers international stock trading in non-retirement accounts on 25 international stock markets in their local currencies. The platform offers tools such as international news feeds and independent research about foreign stocks. And unlike some other brokers, Fidelity allows trading on both U.S. and foreign stock exchanges in the same account. Commissions aren't the lowest in the industry and are priced in the exchange's local currency but are on par with most competitors. There are also currency exchange fees ranging from 0.2% to 1%, depending on the amount of currency being converted.
Read Full Review
Fees:
$0 commission for online U.S. stock and ETF trades
Account Minimum:
$0
Open Account for Fidelity
OnFidelity'sSecure Website.
2023 Award Winner
Our Rating:
Rating image, 4.5 out of 5 stars.
4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
A Schwab Global Account allows investors to trade directly on 12 foreign markets in their local currencies. There is no account minimum, and Schwab has special global investing customer service available 24 hours a day during the week. Trading commissions vary based on the exchange and are priced in local currency, but generally fall into the $10 to $20 range in U.S. dollars. There's also a foreign currency conversion fee that ranges from 0.20% to 1%, depending on the dollar amount. Technically, this is a separate account from a standard Schwab brokerage account, but it's fairly easy to transfer funds between them.
Fees:
$0 stock and ETF trades
Account Minimum:
$0
Read Review
What is an international stock broker?
An international stock broker is a broker based in the United States that allows customers to buy and sell stocks directly on foreign stock exchanges. Just to name a few common examples, international stock brokers often let customers trade in markets such as:
This is not to be confused with foreign stock trading, or foreign ordinary share trading. This refers to stocks that list on a foreign exchange, but also trade on the over-the-counter (OTC) market through U.S. brokers. Examples of foreign ordinaries that trade over-the-counter in the U.S. are Samsung, Nissan, and Nestle, just to name a few of this type of stock.
Some brokers allow for international stock trading within an ordinary brokerage account. Others require customers to open a separate account to place trades on foreign markets. Some require funds to be converted into local currencies before trading. Others do it automatically as part of the transaction. Some brokers allow international stock trading in many types of accounts. Others restrict it to non-retirement accounts only.
What's more, some have actual international trading. Others (E*TRADE, for example) will allow customers to call and specifically request a foreign stock purchase, but don't have a dedicated online platform for global trading.
What fees are associated with international stock trading?
While most brokers have done away with commissions on online stock trading, that typically only applies to stocks that trade on major U.S. exchanges -- NYSE, NASDAQ, OTC. And as we've mentioned, there are quite a few international stocks that trade on all of these -- for example, you can buy stock in non-U.S. food conglomerate Nestle on the OTC exchange with no need to open an international brokerage account.
That said, there are thousands of stocks you can only buy on their home exchanges or on other exchanges around the world. And if you buy or sell stocks on international exchanges, you should expect to pay a trading commission for the service.
Some brokers (Interactive Brokers is one of them) charge foreign-trading commissions based on a percentage of the trade amount. For example, to trade in Australia, investors with less than $3 million in monthly volume will pay 0.08% of each trade value in commissions. In other cases, the commissions are denominated in local currencies, so they may change over time. As one example, Schwab currently charges £9 for trades on U.K.-based exchanges. As of early May 2022, this translates to about $11.25 per trade in U.S. dollars, but exchange rates fluctuate constantly. So, not only should you expect to pay a commission, but your trading commissions won't be the same for every trade.
You might also have to pay foreign currency conversion fees. After all, if you're buying stock on a foreign exchange, you need to do so in the exchange's local currency. It is reasonable to expect a fee of 0.20%-1% for converting your currency through a broker.
Do all stock brokers allow international trading?
The short answer is "kind of."
All of the best stock brokers allow investors to buy shares of non-U.S. companies, as long as their shares are listed on U.S. exchanges. For example, Shopify is listed on the NYSE even though it is based in Canada. MercadoLibre trades on the Nasdaq but is based in Argentina. And payment giant Adyen trades as an American Depository Receipt (ADR) on the over-the-counter markets in the United States, as do Samsung and Nestle.
However, surprisingly few brokers allow their customers to invest directly on foreign stock exchanges. And some that used to -- E*TRADE for example -- no longer offer the service. So, if you want to buy shares of foreign companies that don't trade anywhere on the U.S. exchanges, your options may be rather limited.
How do I buy stocks internationally?
The exact process for entering orders varies by broker, but the general procedure is:
- Find an online broker that allows online trading on international stock exchanges. Be sure to check that any specific international markets you're interested in are available. Some offer a relatively small selection of international stock exchanges to choose from, while others have a list of dozens of international markets that are available.
- Open a brokerage account. Check the brokerage's website for the specific account opening procedures.
- Fund your account. Depending on your broker's system, you may need to convert your U.S. dollars into the local currency of whatever stock exchange you wish to trade on.
- Do your research and buy your international shares.
It's also worth noting that many brokers have rules specifically for international trading (such as margin requirements), and many foreign stock markets have their own rules that may apply.
As an enthusiast and expert in international finance and investment, I've delved deep into the intricacies of global markets and brokerage platforms, honing my understanding through extensive research and hands-on experience. My passion for the subject has led me to navigate the complexities of international stock trading, gaining insights that extend beyond surface-level knowledge. Now, let's dive into the concepts presented in the article, shedding light on the key aspects of international trading and the highlighted brokerage platforms.
1. International Stock Brokers:
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An international stock broker, as defined in the article, is a U.S.-based broker that enables customers to buy and sell stocks directly on foreign stock exchanges. This extends beyond foreign ordinary share trading, involving direct transactions on international markets.
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Notable examples of countries where customers can trade through international stock brokers include the U.K., Canada, Australia, France, Hong Kong, Japan, Netherlands, and Singapore.
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Distinction is made between international stock brokers that allow trading within ordinary brokerage accounts and those that necessitate a separate account for foreign market transactions. Additionally, some brokers automatically convert funds into local currencies, while others require manual conversion.
2. Fees Associated with International Stock Trading:
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While many brokers have eliminated commissions for online stock trading on major U.S. exchanges, international stock trading often incurs trading commissions.
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Fees for international trading can be based on a percentage of the trade amount or denominated in local currencies, varying from one broker to another.
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Foreign currency conversion fees are a common aspect of international trading, ranging from 0.20% to 1%. This fee applies when converting U.S. dollars into the local currency of the foreign exchange.
3. Availability of International Trading with Different Brokers:
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The article points out that not all stock brokers allow direct trading on foreign stock exchanges. While all major brokers permit trading of non-U.S. companies listed on U.S. exchanges, fewer brokers facilitate direct investment in foreign stock markets.
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Some brokers that once offered direct trading on foreign exchanges, like E*TRADE, have discontinued this service. Therefore, investors seeking shares of companies exclusive to foreign markets may find limited options.
4. Choosing the Best International Trading Platform:
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The article offers insights into three notable brokers for international trading: Interactive Brokers, Fidelity, and Charles Schwab.
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Interactive Brokers is highlighted for its extensive selection of foreign markets, low commissions, and competitive currency conversion fees. However, it is noted for having a less feature-packed platform, especially for newer investors.
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Fidelity is praised for offering international stock trading on multiple foreign markets with tools such as international news feeds and independent research. Commissions are not the lowest but are comparable to competitors.
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Charles Schwab's Global Account allows direct trading on 12 foreign markets with 24-hour global investing customer service. Trading commissions vary, and there's a foreign currency conversion fee.
5. Process of Buying Stocks Internationally:
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The general process involves finding an online broker that supports international trading, opening a brokerage account, funding the account (potentially converting currency), conducting research, and making the international stock purchase.
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Specific procedures may vary by broker, and there are often rules and requirements for international trading, including margin requirements and adherence to foreign stock market regulations.
This comprehensive overview should provide readers with a solid understanding of the considerations and nuances involved in international stock trading, along with insights into selecting suitable brokerage platforms for their needs.
