If you want to trade foreign stocks, you’ll need a broker that offers international trading, as not all brokers do. Access to foreign stocks significantly increases the number of companies you can invest in and is an excellent way to diversify your portfolio.

Here are the top brokers for international trading, along with key considerations for trading foreign stocks.

How to trade foreign stocks

Most American investors can already access some foreign stocks through their U.S. brokerage accounts. This is possible because many large foreign companies, such as BMW and Nestle, trade on American exchanges as American depositary receipts (ADRs). ADRs can be found on major exchanges like the New York Stock Exchange and Nasdaq or on smaller, less liquid markets like the over-the-counter (OTC) market.

However, numerous foreign companies remain inaccessible to American investors unless purchased directly on their home stock exchanges. The best brokers for foreign stocks enable you to buy these stocks on their local exchanges, not just through ADRs. This allows you to purchase the same stocks as local investors in those countries.

Investing in foreign stocks does come with additional risks beyond those of domestic stocks, including:

  • Currency risk: Your investment is affected by the foreign company’s operating currency, influenced by the country’s inflation, monetary policies, financial health, and the exchange rate against the dollar. A strong dollar can decrease the value of your investment in the foreign stock.
  • Regulatory risk: You’re subject to the governance policies of the country where the company is based. This regulatory environment can differ significantly from what American investors are accustomed to, posing additional challenges.

Despite these risks, accessing foreign stock markets can offer significant opportunities to discover undervalued stocks, provided you’re willing to put in the effort to research them.

Best brokers for international trading in 2024

Interactive Brokers

Interactive Brokers offers access to a broad range of global markets, covering 34 countries including Canada, Mexico, the U.K., Germany, and Japan. Known for its strong trade execution and low margin rates, the broker supports trading in both U.S. and international stocks. You can trade on their Pro and Lite tiers, with the Lite tier offering $0 commissions.

TradeStation

TradeStation provides international stock trading through its TradeStation Global account, which is separate from its U.S.-focused accounts. This global account offers access to 343 markets, including those in Europe and the Asia-Pacific region, thanks to its partnership with Interactive Brokers. You’ll benefit from TradeStation’s charting and analysis tools while also accessing Interactive Brokers’ core trading platforms.

Fidelity Investments

Fidelity allows trading in 25 international markets, including key regions such as Canada, Germany, Hong Kong, and the U.K., with a focus on European markets. You can settle trades in either dollars or local currencies and receive real-time market data during foreign market hours. Fidelity’s platform integrates U.S. and international stocks in a single account, simplifying management.

Charles Schwab

Charles Schwab offers international stock trading through its core brokerage account, enabling you to buy and sell ADRs and foreign stocks on the OTC markets across 30 countries, including Canada, Germany, Mexico, the U.K., and other European markets, as well as Hong Kong. For direct trading in local currencies, you can use a Schwab Global account, which provides access to 12 markets, including Germany, France, Hong Kong, Japan, and the U.K.

Moomoo

Moomoo is a standout option for trading Chinese stocks, offering access to Hong Kong stocks and China A-shares listed on the Shanghai or Shenzhen exchanges. This unique access allows U.S.-based traders to invest directly in Chinese markets, with the added benefit of competitive margin loan rates. While Moomoo excels in this niche, it primarily supports individual accounts and does not offer other types of accounts.

In Conclusion

If you’re interested in finding promising but less well-known stocks, exploring foreign markets might be a valuable strategy. However, it’s important to be aware of the unique risks associated with investing in international markets as you search for these hidden opportunities.