International trading involves buying and selling of securities in foreign markets. The process includes costs such as a commission to cover settlement costs, local broker fees, and fees specific to some foreign exchanges. Choosing U.S. dollars as the settlement currency will incur a foreign currency exchange fee. The return can be affected by fluctuations in the foreign currency against the U.S. dollar. The execution of orders can happen on the primary exchange or regional exchanges within the market, determined by a local broker in each country. All foreign currency and international stock balances will be listed in your Positions. There are certain requirements and standards that need to be adhered to while trading in international markets.
Please note that shares trade in round lots where one unit is 100 shares.
How To Buy International Stocks On Interactive Brokers (IBKR)
Step 1: Open and fund an IBKR account
- Visit Interactive Brokers and sign up for an account if you don’t already have one.
- Enable multi-currency trading and foreign stock trading permissions in your account settings. To trade foreign stocks, these trading permissions must be added through Client Portal by following these steps:
- Log into Client Portal
- Select the User menu (head/shoulders icon, top right) and click Settings
- Find the Trading section under Account Settings
- Click Trading Permissions
- Select Add or Request for the multi-currency trading and foreign stock trading permissions
- Review and approve required disclosures and agreements
For cash accounts, currency conversion is required if the necessary currency is not held. For margin accounts, a loan will be created. Permissions are typically approved within 48 business hours.
Step 2: Convert currency (optional but recommended)
- IBKR allows you to convert USD to the foreign currency you need before trading.
- To convert:
- Go to “Trade” > “Convert Currency”
- Select the currency pair (USD to ie. JPN)
- Enter the amount and execute the trade to so you have Japanese Yen
- This avoids auto currency conversions, which may have higher fees.
Step 3: Search for the stock
- Use IBKR’s Trader Workstation (TWS) or Client Portal
- Search for the stock by name or ticker
- Select the appropriate foreign exchange (TSE for Tokyo)
Step 4: Place the order
- Enter your order details, review fees, exchange rate impacts, and trading hours (foreign markets have different time zones).
- Submit the trade. If you’d like to place a trade while the market is closed, we suggest placing a limit order where you set a maximum price at which you want to buy or sell the security. Unlike a market order, which executes immediately at the best available price, a limit order will only execute if the stock reaches your set price or better.
Step 5: Monitor holdings and adjust
- Use IBKR’s Portfolio Management tools to track international stocks.
- Be aware of foreign taxes and dividend withholding rates (IBKR provides tax documentation to help with this).
Click here for a video tutorial from Interactive Brokers.
How To Buy International Stocks On Fidelity
Fidelity Investments offers international stock trading, but it’s somewhat limited compared to Interactive Brokers. You can either trade directly on foreign exchanges (limited selection) or buy American Depositary Receipts (ADRs) and international ETFs.
- Go to Fidelity’s website and open a brokerage account, if you don’t already have one.
- Ensure your account has international trading enabled (this may require a request via customer service).
- Or follow this link to enable your eligible account(s) online.
- Once registered and ready to make the trade, call Fidelity’s International Trading Desk to place the order over the phone.
- Fidelity automatically converts USD to the local currency for foreign stock purchases. Be mindful of exchange rates and fees.
How To Buy International Stocks On Charles Schwab
If you have a standard Schwab account, you can place trades over the phone through the Schwab Global Trading Desk at 800-992-4685.