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Best Brokers for International Trading 2022

Selecting the best brokers for international trading ultimately comes down to who has the most products in the most markets, but we also judge the best international trading platforms in terms of their quality and tools. Interactive Brokers (IBKR) emerges once again as the overall winner with the best online broker for international trading and the best online broker for non-US investors, categories it has dominated for years now. Fidelity rounds out the list with the best international trading platform for beginners. International investors will find each of these platforms covers the international exchange traded funds (ETFs) and American depositary receipts (ADRs) universes along with direct access to assets in markets around the world.

Best Brokers for International Trading of 2022

Interactive Brokers: Best Online Broker for International Trading & Best Online Broker for Non-U.S. Investors

  • Account Minimum: $0
  • Fees: Maximum $0.005 per share for Pro platform or 1% of trade value, $0 for IBKR Lite
Read full review

Interactive Brokers: Best Online Broker for International Trading

Why We Chose It

Interactive Brokers (IBKR) is hands down our top choice for the Best Online Broker for International Trading. International traders have access to all the usual ADRs, global mutual funds, and ETFs at IBKR. The real edge to Interactive Brokers is that it opens up international trading opportunities in 150 markets across 33 countries, using 23 currencies. Within these markets, you have access to stocks, options, futures, forex, bonds, and mutual funds across the globe, and IBKR provides you with the trading tools and analysis to make the most of it.

Pros

  • Unparalleled list of assets spanning the global market

  • Can compare prices and financial data for global stocks all in your chosen currency

  • GlobalAnalyst enables screening by region, country, industry, market cap, and currency

  • Trader Workstation (TWS) is a powerful tool with high-level of customization

Cons

  • Steep learning curve to the assets and tools available

  • TWS can be intimidating for new traders

  • Tiered pricing and fees can be confusing

Overview

Interactive Brokers was founded in 1978 by its current Chairman, Thomas Peterff. The company is by far the best international broker available and provides trade execution and custody of securities, commodities, and financial assets through U.S. and foreign exchanges 24 hours per day, seven days a week. IBKR provides trading in 150 markets in 24 currencies and its fees are tiered and among the most competitive. 

New innovations at IBKR include a market rate interest paid on uninvested cash, the IBKR GlobalTrader mobile app, and the addition of fractional shares trading for European shares and ETFs, adding to the existing capabilities for U.S. products.  In a nod to environmental, social, and governance (ESG) investing, investors can offset their carbon footprint with the new IMPACT App. Current and new international traders will welcome the TWS innovations including a worldwide news feed and additional support for the Australian Security Exchange (ASX) future products.

International traders can access financial markets and all assets on the desktop, web, and mobile versions including both the IBKR mobile and the IBKR GlobalTrader mobile app. TWS stands up among the best platforms with features suitable for beginners though professional traders. TWS is replete with technical analysis tools, Social Sentiment by Social Market Analytics, ESG scores, and extensive research tools. 

The IBKR GlobalTrader mobile app is the shining star for investors seeking the best international trading platform. International investors can screen by region, country, industry, market cap, and currency. The results provide price, financial metrics, and ratios. The real-time international news round out the features for global traders. For newer investors, the app supports fractional shares trading with no minimum as well as cryptocurrency trading.

The range of offerings and order types is among the broadest of any broker in the industry. Available assets at IBKR include stocks, penny stocks, ETFs, mutual funds, fixed income, options, futures and futures options, forex, and cryptocurrency.  On both the client portal and mobile app, clients can input over 100 order types and algos on the TWS. 

The IBKR Mobile and the IBKR GlobalTrader are satisfactory for a quick trade or account check. For the deep research, analysis, complex orders, and trades the TWS or desktop portals are best-in-class.

Interactive Brokers: Best Online Broker for Non-U.S. Investors

Why We Chose It

IBKR accepts clients from more than 220 countries and territories, with offices in the U.S., Switzerland, Canada, Hong Kong, U.K., Australia, Hungary, Russia, Japan, India, China, Luxembourg, Estonia, Singapore, and Ireland. IBKR is the best broker for international citizens to trade in the U.S. and globally, with the broadest list of markets and products out of all the brokers we reviewed.

Pros

  • Can fund accounts in multiple base currencies

  • Direct platform support for non-native currency conversions

  • Accepts customers from over 200 countries and territories

  • New GlobalTrader App puts international trading features at your fingertips

Cons

  • Fee-based commissions are cumbersome

  • Website and TWS platform can be intimidating to less active traders

  • Mobile app lacks complete set of features and services

Overview

Interactive Brokers provides worldwide access, allowing you to fund your account in your domestic currency and then convert at market rates to trade outside your domestic market. The Trade Worldwide news feed keeps you up-to-date on happenings around the globe. The offerings for international traders continue to expand and now feature international futures products including Eurodollar packs, Canada bond futures, UAE spot currencies, Hong Kong government green bonds, and more. Here again, it is hard to see any of the current brokers catching up with Interactive Brokers any time soon simply because the gap is so large.

International clients can access all of the features available to their U.S. counterparts including the new Traders’ Insight Podcast which interviews a wide range of experts on a variety of investment topics. This is a great addition for international traders to learn on the go. The IBKR GlobalTrader app also gives you access to 90 international markets including the LSE, HKS, NYSE, and NASDAQ. With the mobile portfolio analysis tools and educational resources, you can learn and trade from your mobile device. IBKR GlobalTrader also has a neat swap feature where you can quickly switch positions in the same overall dollar amount by tapping the asset you want to sell and the one you want to buy. 

International investors with less cash can start small with fractional shares trading for U.S. and European stocks. The paper trading account allows new investors to practice before committing their resources. The experienced customer service licensed brokers can guide international clients with stock, fund, bond, and options investing including guidance for simple to complex trades and assistance in using the platform. The fees are clearly spelled out for international trading, but be prepared as the trading fees vary per country.

Fidelity: Best International Trading Platform for Beginners

  • Account Minimum: $0
  • Fees: $0 for stock/ETF trades, $0 plus $0.65/contract for options trade
Read full review

Why We Chose It

Investors who want a basic international trading platform might consider Fidelity International trading with access to most of the major international investment markets and currencies. Fidelity’s international research resources and screeners also simplify finding companies that suit your criteria. You’ll have access to the complete Fidelity list of assets, including mutual funds, stocks, ETFs, bonds, options, fractional shares, IPOs, and warrants along with low costs, and excellent educational resources.

Pros

  • Trade domestic and international markets through one account

  • Dedicated international trading specialists available

  • Real-time global market data and news

  • Superb international research resources

Cons

  • Retirement accounts restrict international trading

  • No Asia-Pacific markets available beyond Singapore and Hong Kong

  • No investments in South and Central America except Mexico

  • Only African market is South Africa

Overview

Privately owned Fidelity Investments was founded in 1946 by Edward C. Johnson, II, and is family-run today by granddaughter Abigail Johnson. The company fulfills its mission of innovating to best serve its customers in an evolving world of investing. Fidelity is a comprehensive investment firm along the lines of Schwab, Vanguard, E*TRADE, and Merrill Lynch. 

Fidelity recently launched ETFs with access to the crypto and metaverse industries. The company also created four new ESG funds, capitalizing on the trend to support sustainable businesses. Their fee-free index mutual funds are strong competitors with comparable low fee, passively managed ETFs.

Beginner investors who want to tap international markets might find the Fidelity international stock trading services easier to navigate than those at IBKR. Investors can trade both domestic and international stocks in one brokerage account. Fidelity international trading is suitable for those who want to go beyond ADRs, global U.S. stocks, and international funds. International investors will find the opportunity to trade in 25 countries. You can settle your trade in either U.S. dollars, or the local currency. 

The 25 international markets include Australia, Canada, Hong Kong, Singapore, Mexico, South Africa, and many European countries. Fidelity is known for its extensive research resources, and the international markets research is no exception. The platform offers global news, screeners, and research, categorized by geographic region. 

The pre-set online or rep-assisted trading fees are clearly stated, and listed in the local market currency. For example, you’ll pay $32 AUD to trade in Australia, which is equivalent to $22 USD. The $250 Hong Dollar HKD translates to $31.85 USD. Additional costs also apply, including currency exchange fees. 

The Fidelity mobile app is well regarded, with most basic features available on your phone or tablet. That said, the stock research function sends you back to the website. If you’re looking for excellent research, reasonable pricing, foreign trading specialists, and access to the most popular international markets, then Fidelity’s International Trading services are worth consideration.

Final Verdict

Investors who want to invest directly in international markets in a serious way will be best served by Interactive Brokers in almost every situation. For investors outside the U.S. Interactive Brokers is the obvious choice as there is no real alternative that can compare. There just aren’t any runners-up to this race as Interactive Brokers has the market tied up for intermediate and advanced International investors with its incredible depth and reach. IBKR caters to those who want access to a wide range of international assets and markets, and makes it a habit to continually upgrade the tools and resources those investors need. The plentiful products, features, and services can be both a blessing and a curse, however, as it makes Interactive Brokers a bit tricky to navigate. 

This, of course, is where Fidelity comes in for less experienced U.S. investors. Beginners will like the streamlined international trading experience at Fidelity. Fidelity offers fewer assets for international trading, but overall the platform is comprehensive enough for most investors. Fidelity presents extensive free research for clients, while IBKR has both free and paid tiers for their research offerings. It is worth noting that the IBKR GlobalTrader app is a notch above Fidelity’s app when it comes to empowering mobile international investors. 

Ultimately, investors are well-served at Interactive Brokers and Fidelity. Fidelity can give U.S. investors a taste of international markets in an easy to digest format, while Interactive Brokers gives you the whole global buffet and the full array of tools to make the most of it. Which one you choose depends on your particular appetite.

What Is an International Broker?

An international broker is a brokerage firm that offers U.S. and/or international investors the ability to buy and sell stocks across the globe. To qualify as an international broker for our review, a brokerage firm must be U.S.-based, and U.S.-regulated. Two of the key reasons individual investors would want to invest in international investments (or investments that offer international exposure) are diversification and the potential for growth, particularly in emerging markets.

Although most investment brokers provide access to global stocks, ETFs, and mutual funds, serious investors who want to trade on international exchanges need to go through an international broker.

How To Buy Stocks Internationally

There are a few ways individual investors can gain exposure to international markets. For example, you can buy American depositary receipts (ADRs), U.S.-registered mutual funds, or U.S.-registered ETFs that invest in foreign securities. You might be surprised that many large U.S. companies do business overseas and give you access to international consumers. In this case, investing in a multinational stock might be similar to buying an international stock. 

However, to buy individual stocks on a foreign market, you need to open an account with an international broker—one that supports the buying and selling of international stocks. It’s wise to understand the fees, available countries, and assets before selecting your international broker.

Once you have opened and funded an account with an international broker, buying international stocks is similar to buying stocks on U.S. exchanges. You may need to request access (including price data) for the specific exchange(s) you want to trade. Also, you may need to research the exchange and ticker symbol to ensure you are trading the intended stock.

In general, international stocks must be bought and sold on the same exchange (e.g., if you buy stock in France you must sell it there, too). Certain exchanges may have additional requirements. For example, the Tokyo Stock Exchange and Osaka Securities Exchange set daily price limits for all securities to manage volatility. In most cases it is more expensive to buy and sell stocks internationally. The commissions and fees for international trades might differ from those for U.S. stocks, and currency exchange fees may apply, as well.

What To Consider When Choosing an International Broker?

When choosing an international broker, look for the same features you would want out of any broker: a strong industry reputation, up-to-date security standards, solid customer service, reasonable costs, robust trading tools, helpful educational content, and access to the markets you want to trade.

Access to research reports, screeners, and international news is very important when choosing an international broker. It might be more important to perform in depth research before buying an international stock than a U.S. company, due to differing legal reporting requirements for international firms.

Can a Non-U.S. Citizen Open a Brokerage Account?

In most cases, legal U.S. residents who are not U.S. citizens can open U.S.-based brokerage accounts, provided they complete the required paperwork and certify their tax status. You might be required to complete additional tax documents that are required for international citizens. 

Non-U.S. citizens who live outside of the U.S. can open an account if the broker accepts applications from their country of residence. There might also be limitations on the types of accounts you can open if you’re not a U.S. resident. Another alternative might be to open a brokerage account in your home country with access to the U.S. investment markets.

Other International Trading Considerations

A small group 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. may not be not as proactive, and foreign brokerages have been known to shut down overnight, absconding with their customers’ assets. To avoid that risk you could consider investing in a sector fund, which invests in companies within a particular geographic region or company.

Fees can be a major deterrent to trading stocks in international countries. With the wide availability of international mutual funds, with seasoned fund managers, you might be better off choosing an international fund or two, to bulk up your international investing.

Methodology

Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. This year, we revamped the review process by conducting an extensive survey of customers that are actively looking to start trading and investing with an online broker. We then combined this invaluable information with our subject matter expertise to develop the framework for a quantitative ratings model that is at the core of how we compiled our list of the best online broker and trading platform companies.

This model weighs key factors like trading technology, range of offerings, mobile app usability, research amenities, educational content, portfolio analysis features, customer support, costs, account amenities, and overall trading experience according to their importance. Our team of researchers gathered 2425 data points and weighted 66 criteria based on data collected during extensive research for each of the 25 companies we reviewed. 

Many of the brokers we reviewed also gave us live demonstrations of their platforms and services, either at their New York City offices or via video conferencing methods. Live brokerage accounts were also obtained for most of the platforms we reviewed, which our team of expert writers and editors used to perform hands-on testing in order to lend their qualitative point of view. 

Read our full Methodology for reviewing online brokers.

This article was originally published by Investopedia.com. Read the original article here.

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