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If you’re ready to get a passport for your portfolio, here are the U.S.-based brokers that can help your assets travel abroad:
- Interactive Brokers
- Fidelity Investments
- Charles Schwab
A key component of a balanced portfolio is exposure to international markets. Exchange traded funds (ETFs) focused on a particular geographical area can be added to any portfolio, but the investor has little control over the stocks included in the fund. Most brokers also allow their clients to trade American Depositary Receipts (ADRs), which are certificates representing shares in a foreign stock. ADRs are traded on U.S. exchanges.
For investors who want to trade directly in instruments traded in markets outside the U.S., a small subset of online brokers allows you to place trades on foreign markets. You’ll find stocks, bonds, futures, and currencies to trade, but be mindful of additional risks like limited liquidity and currency exchange rate fluctuations.
If you’re interested in one or two international markets, you might consider opening an account with a local broker in that country. The major risk here is that regulatory agencies outside the U.S. are not as proactive, and foreign brokerages have been known to shut down overnight, absconding with their customer’s assets.
Interactive Brokers
- Account Minimum: $0
- Fees: $0.005 per share
Nobody does it better. Interactive Brokers offers a multi-currency account that lets you trade in products worldwide as well as make deposits and withdrawals in different currencies. You choose the base currency for your account for reporting (Americans usually choose the US dollar). Using the downloadable Trader Workstation (TWS), all international positions are opened using a margin account, which does not require you to convert currency beforehand, though your holdings in the international asset are subject to currency fluctuations for profit/loss calculations. IB’s charting and quote services can be used on any asset for analysis and risk assessment. When a new electronic exchange opens anywhere in the world, IB soon offers its products on TWS.
Interactive Brokers also received awards for Best Overall Online Brokers, Best for Low Costs, Best for Options Trading, Best for Penny Stocks, and Best for Day Trading.
Pros
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IB allows trading on almost every electronic exchange worldwide.
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IB also offers 104 currency pairs for forex trading
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Use the IBot feature to find international trading features easily
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International assets can be traded around the clock
Cons
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You will likely pay additional data fees for international markets
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High risk of margin call if an international asset experiences a sharp drop in value
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Most of the international trading features are available only on the TWS platform
Fidelity Investments
- Account Minimum: $0
- Fees: $4.95 per stock/ETF, $4.95 plus $0.65/contract per options trade
Fidelity customers can trade in 25 countries, and can choose whether the transactions will settle in U.S. dollars or the local currency. There are 16 currencies available to trade, and you can hold domestic and international stocks in a single account. All foreign currencies and international stock holdings are displayed on the Positions screen, sortable by currency and country. However, there are no good-til-canceled orders, short sales, or additional order instructions (e.g. fill or kill) for international orders.
Fidelity also received awards for Best Overall Online Brokers, Best for Beginners, Best Stock Trading Apps, Best for ETFs, Best for Penny Stocks, Best for Roth IRAs, Best for IRAs and Best Web Trading Platform.
Pros
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Well-organized news and data sections on the website and in mobile apps.
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Real-time quotes are available for international stocks at no additional cost.
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Fidelity’s International Trading Desk has brokers available for support.
Cons
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All trades are limited to cash. No margin trades for international equities.
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Orders are good only for the trading day, and only for market or limit orders.
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International trading is not allowed in retirement accounts.
Charles Schwab
- Account Minimum: $0
- Fees: $4.95 per stock and ETF trade, $0 for Schwab ETFs and $4.95 plus $0.65 per contract for options
Schwab customers with a Schwab One account (which also includes cash management features) can make trades with broker assistance on 30 different exchanges. A separate Schwab Global Account offers direct online access to 12 markets in their local currencies. Whichever you choose, you can access the international stock screener which lets you sort by 30 criteria such as country, sector, market cap, and stock performance. Schwab’s international equity ratings cover more than 4,000 stocks and offer in-depth analysis, based on 14 predictive criteria including momentum and risk for than stocks 28 countries.
Charles Schwab also received awards for Best Overall Online Brokers, Best Web Trading Platform, Best for Options Trading, Best for Penny Stocks, Best for Beginners, Best for Roth IRAs, Best for IRAs, Best for ETFs and Best Stock Trading Apps.
Pros
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Terrific proprietary research is available with Schwab Equity Ratings International
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Market commentary relevant to current conditions is updated almost daily.
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Third-party research is available from Morningstar, Credit Suisse, Ned Davis Research, and the Economist.
Cons
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No fixed-income securities are available in a Global Account.
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The Global Account is linked to, but separate from, your regular Schwab brokerage account.
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Trades placed via broker on the Global Investing Services desk incurs higher fees.
Merrill Edge, TD Ameritrade and Vanguard allow international transactions via a live broker, but they do not enable online trading of international securities. TradeStation allows its customers to trade futures on seven European exchanges.
Methodology
Investopedia’s mission is to provide investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of six months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting over 3,000 data points that we weighed into our star scoring system.
In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.
Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.
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