Though the NASDAQ and the New York Stock Exchange hog most of the glory when it comes to stock trading, international exchanges have quickly picked up the pace, improved their offerings and ease-of-use in order to compete with the United States.
For example, the Tokyo Stock Exchange now trades an average volume of $3.9 trillion worth of shares per day. The Toronto Stock Exchange moves an average of 39.7 billion shares per day and the National Stock Exchange of India has reached a market capitalization of over $2.27 trillion.
There’s little question why investors around the globe have turned to international exchanges for their next big opportunities.
If you’re an American investor and you want to directly invest in a foreign market, you’ll need to work through a brokerage firm native to that country. The best online brokerages can give you access to some of the largest international markets from the comfort of your own home. However, trading internationally can be a little different than trading on the NYSE or NASDAQ.
Though most international exchanges follow the basic principles used by the American markets. We’ve created a quick guide to help you learn more about international exchanges and how you can start buying and selling on non-U.S. stock markets.
Quick Look: The Best International Brokers
Trading Internationally: What’s Different
Most principles of market trading and market psychology are the same no matter where you go in the world. Whether you’re trading in the United States, the United Kingdom, Japan or Hong Kong, you can still use your technical indicators or choice or candlestick analysis to make profitable trades. Most international stock markets also permit outside investors to buy and sell shares of stock as long as their trades are executed by a domestic brokerage firm.
There are a few basic differences to be aware of before you make a deposit in your account, including:
Times and Hours of Operation
If you’ve ever traded stocks in the United States, you probably already know that you can only trade during certain hours — specifically between the hours of 9:30 a.m. and 4 p.m. Likewise, individual stock markets set their own hours that vary significantly depending on the country’s time zone.
For example, the Australian Securities Exchange is open between the hours of 10 a.m. and 4 p.m. local time; this means that if you want to trade Australian stocks and you’re in New York City, you’ll need to be prepared to trade between the hours of 6 p.m. and midnight Eastern time.
Each individual exchange may also set their own holidays when the markets are closed, and these holidays can be very different from the market holidays in the United States. For example, the Tokyo Stock Exchange is closed for a wide range of Japanese holidays including the emperor’s birthday (December 23), coming of age day (second Monday of January), and health and sports day (second Monday in October) but is open during the American holidays of Christmas, Thanksgiving and Labor Day.
Mobile App Compatibility
In the United States, most major brokers offer mobile trading software that mimics the full compatibility of their desktop software. However, in other countries, mobile compatibility is a relatively new idea and variability between brokerages will vary significantly. If you only trade on a mobile phone, make sure you research mobile offerings before you make a commitment and open an account.
Commission Structure and Pricing
If you’ve traded through a brokerage in the United States, you’ve probably paid a flat-rate commission fee. For example, if you’re buying Tesla stock through Ally Invest, you’ll pay a flat $4.99 commission no matter if you buy a single share or you buy 1,000 shares, as long as your buy is done in a single movement.
International brokers often charge based on the total value of the trade, and higher value trades pay a percentage of commission instead of a single flat rate. Make sure to read your brokerage’s policies before you sign on so there are no surprises.
What to Look for in an International Broker
Not every broker offers access to every market in the world. Research the specific international markets you’re interested in and look for a brokerage firm that offers access to those markets. You may have to open more than one account if you’re interested in trading on multiple international markets.
Offers the Equities You Want to Trade
If you’re only interested in buying and selling Japanese stocks, every Japanese brokerage firm will allow you the access you need. However, if you’re also interested in buying and selling options contracts, futures contracts, forex and cryptocurrencies, don’t assume that every brokerage will offer you the wide range of equity access we’re used to in the United States.
Read through your brokerage’s total list of offerings to make sure they have everything that you need before you open an account or make a deposit.
Consider Commission and Fee Structure
Because international brokerages often use varying fee structures, it’s easy to miscalculate how much you’ll have to pay per trade. This can seriously cut into your profits, especially if you’re a high-level investor who makes multiple trades per week. Look for a broker that offers an upfront reasonable commission and fee structure so you’re not surprised when you make your first trade.
Enhanced Security Options
Prosecuting fraud that occurs online is difficult. Prosecuting fraud that occurs online across international borders is virtually impossible. Look for a brokerage that offers enhanced account security options (like personal question account recovery features or two-factor authentication) and make sure that you turn these features on.
The Best International Brokers
Check out which brokers made Benzinga’s top international brokers for this year.
If you’re looking to trade internationally, Interactive Brokers can introduce you to a number of the world’s most popular stock exchanges. Designed for the professional stock trader, Interactive Brokers offers the widest range of international market access online in almost every country on the planet. Interactive Brokers offers access to major exchanges in Japan, India, Estonia, France, Australia, Germany, Israel, Spain and many other countries.
They also offer users access to options, futures, forex and even metal investing markets, which makes its trading software a one-stop-shop for almost every market imaginable.
Interactive Brokers was designed with very active traders in mind and its fee structure reflects this. You’ll pay about $.005 per share for most trades with a $1 trading minimum and a maximum of 1% of your trade value. Discounts are available for very large trades or frequent traders. Though there is no minimum balance required to open an account with Interactive Brokers. However, the company does charge fees for inactive traders who don’t pay between $10 and $20 per month in commission.
While this inactivity fee is uncommon among most American brokers, it’s a relatively common feature abroad — and with a state-of-the-art platform, access to most international markets and low-fee trading, Interactive Brokers is our top choice for international trading.
Plus500 is an international finance firm that allows traders to buy and sell shares in a number of countries, including Germany, the United States, the Netherlands, Japan and many more. Though the shares you’ll have access through are limited, the most popular shares available on the world’s major exchanges are all supported.
The company also offers access to commodities trading, index investing and cryptocurrency trading. Plus500’s trading platform and system are also available in over 30 languages, which can be a relief for non-native English speakers.
If you’re a smartphone-only trader, you’ll love Plus500’s robust mobile support. Trading apps are available for both the iPhone and Android platforms and special apps are also available for tablet trading. Plus500’s apps mimic full compatibility and functionality of the web version. An estimated 40% of trades take place on Plus500’s mobile and tablet platforms, a testament to its ease of use.
Instead of a commission fee, Plus500 charges a spread between the bid and ask price of shares similar to the structure used when buying and selling currencies. Though the spread system may take some getting used to for stock market natives, Plus500’s robust spread of investing options and easy-to-use platform may make the extra lesson worth the time investment.
Though Fidelity is already a household name when it comes to saving for retirement, the brokerage firm also offers an impressive international stock selection. Fidelity investors have access to over 25 international markets including Greece, South Africa, Japan, Poland and many more. You can choose to display international stock prices in your native currency and can also hold multiple currency types in a single account without converting to USD.
Fidelity also has a $0 account minimum, which is rare for international accounts with such a wide breadth of stock options.
The one aspect that makes Fidelity stand out among a sea of brokerage options is its commitment to research and trading tools. Unlike most international brokers, Fidelity offers users an outstanding selection of independent research for no additional fee. Real-time quotes are available for free even for international accounts, which can be an asset for traders located outside of the country they’re trading in.
It offers a well-organized research deck and affordable commissions and fees even on international accounts. Fidelity is another top choice for both domestic and international investors interested in trading multiple markets.
With over 20 years of history, CommSec is the number one leading broker in Australia. Obviously, this means that CommSec offers traders access to the entirety of the Australian Securities Exchange, but the platform also features access to over 25 international exchange markets, ranging from the London Stock Exchange to the Tokyo Stock Exchange.
CommSec stands out amongst other brokers for its superior customer service options and low fees. CommSec offers users access to research from international account specialists and offers international investors a number of avenues to connect with their team without the need for an Australia-based phone number. CommSec’s commissions vary depending on the total value of the trade, as is usual with Australian brokers.
You can expect to pay between $19.95 to $39.95, depending on which market you’re trading on. While these fees are a bit higher than most other brokers, CommSec’s easy-to-use platform, research options and access to expert advice may make the extra costs worth it for new users or users who don’t make many trades per month.
Another Australian offering, WestPac offers traders access to over 25 international markets. WesPac’s offerings are expansive and opening a WesPac account is especially recommended for Australian investors because the banking institution also allows Aussie users to track their superannuation funds alongside shares. WesPac also offers a number of benefits that most other Australian brokerages make users pay extra for.
These include access to premium research from Morningstar, share recommendations, risk management tools, stock screeners and SMS and email trading alerts — all for no additional cost. WestPac is also one of the few international brokerages that allows users to hold foreign currencies in their accounts without converting the deposit to AUD.
WestPac’s fees are higher than most other Australian brokers. In exchange for these conveniences, you can expect to pay $19.95 per trade or 0.11% of your total trade value, whichever is higher. However, like CommSec, Australian traders who are willing to sacrifice frugality for a one-stop trading platform that also houses their banking and credit card information will likely not mind spending a little more in commission.
Not all international brokerage accounts are created equal. It’s difficult to name a best international broker because the most advantageous broker for you will depend upon the unique type of trading you’re interested in.
Thoroughly research every trading platform you’ve considered and sign up for a demo account to get a better feel for the platform’s specific tools before you make a commitment. There’s nothing worse than making a major deposit only to find that you can’t operate the broker’s platform.