How to Trade International Stocks
Globalization has made the world borderless in many ways. Economic and investment opportunities are not restricted to national boundaries. People are now investing in markets far from home, where they seek greater returns on investment. But there are also many risks involved in trading international stocks. That is why an investor needs a broker to help her navigate the markets.
Other People Are Reading
Things You'll Need
- Investment Information
- Broker
- Money
- Computer
- Internet
- Financial Advisor
Instructions
-
Information
-
1
Obtain current information on international markets. Global investment cannot be done from an abstract. Up-to-date information is available in most major newspapers around the world and on the Internet.
-
2
Select a brokerage. Most brokerages are now online, so you should choose one that will represent your interests globally. E*Trade, TD Ameritrade, Charles Schwab and Scottrade are some of the most popular brokerage companies for online trading in international stocks.
-
-
3
Check out trading in American Depositary Receipts (ADRs). U.S. financial companies sometimes purchase stocks in a foreign company and reissue them in the form of ADRs on the domestic market. ADRs are usually denominated in U.S. dollars, and trading in them allows you avoid the complications of cross-border transactions.
-
4
Be wary when trading internationally. Avoid stocks that have recently soared, as they may be due for a decline after reaching a peak.
-
5
Monitor your stocks closely. The Internet is an important resource for doing this. If you are trading directly online, be prepared to monitor your trades beyond business hours in the United States, in accordance with market hours in different world time zones.
-
1
Tips & Warnings
It is difficult for authorities to regulate borderless markets. To that end, dealers have established the International Securities Market Association (ISMA) to standardize practices in international markets. The organization is based in Switzerland.
Check the status of local currencies. Avoiding exposure to the currency in the market you are trading is almost impossible. The exchange rate with the dollar can be a big factor in your returns. The more the local currency is prone to inflation, the more this will cut into your results as translated into dollars.
References
Resources
- Photo Credit stock market analysis screenshot image by .shock from Fotolia.com
