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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 foreign stock. ADRs are traded on U.S. exchanges.
Best Online Brokers for International Trading in September 2020:
- Interactive Brokers: Best Online Broker for International Trading
- Interactive Brokers: Best Online Broker for Non-U.S. Investors
Best Broker for International Trading and Best Broker for Non-U.S. Investors: Interactive Brokers
- Account Minimum: $0
- Fees: Maximum $0.005 per share for Pro platform or 1% of trade value, $0 for IBKR Lite
For the international trading category, category weightings for the range of offerings were adjusted upwards to measure which broker offered the largest selection of assets across international markets. After that, overall platform functionality and variety of orders types were also measured as these are important to successful trading when undertaking position management in markets that span the globe. These adjustments revealed a clear winner for both the overall best broker for international trading and the best online broker for non-U.S. investors.
Interactive Brokers (IBKR) easily took the best overall with its direct access to 135 global exchanges in 31 countries. This allows traders to trade around the clock using more than 60 different order types to manage their position entry and exit points. Many of the features aimed at international trading are built into IBKR’s downloadable Traders Workstation (TWS) platform, meaning that you’ll end up using it as a primary tool even if you don’t consider yourself a trader. This can be a challenge at first because of the plethora of tools and customizations available through TWS. Learning the platform takes some time, but the learning curve is shorter if you are only using basic functions.
In addition to access to markets across the world, Interactive Brokers also offers a massive inventory of assets, including European debt issues and 115 currency pairs. The only nominal knock on Interactive Brokers in this sense is that fractional share trading only works for U.S. listed stocks, but that is true of every other broker reviewed as well. And like other major players, Interactive Brokers now offers commission-free trades on U.S. stocks and ETFs, helping to make it our consensus pick for international trading two years in a row.
It is worth mentioning the runners up to Interactive Brokers in the overall category, as they are still decent options for investors who may find IBKR's reach and platform — admittedly geared for traders — a bit too intimidating. Fidelity came in second to IBKR with the ability to trade in 25 countries using 16 different currencies. Schwab came in third with its more limited direct access to 12 foreign markets in their domestic currency. As you can see, there is a significant gap between Interactive Brokers and the overall runners up.
This year we also evaluated online brokers in terms of which one best fits the needs of non-U.S. investors, as our audience is increasingly global. Here again, Interactive Brokers’ reach was the deciding factor. Investors with Interactive Brokers can fund their accounts with many different base currencies and then convert at market rates to purchase assets in other markets. So, no matter which market you are going to and from, you’ll be able to make the investment without holding separate accounts or arranging conversion.
If you are a non-U.S. trader or sophisticated investor, you will get much more out of IBKR. The features of IBKR as a trading platform are covered at length in our review, but all that power opens new opportunities when combined with a global outlook. In addition to the incredible tool set in TWS, Interactive Brokers’ asset inventory makes it easier to set up complex, multi-layered trades without using proxies.
The idea of an individual trader placing a multi-market bet including stocks, currencies, options, and commodity futures used to be quite intimidating. Back in the 90s when George Soros’ Quantum Fund broke the Bank of England, it was actually a team of traders shorting the pound against the German mark, going long on UK stocks, and purchasing German bonds in advance of underperformance in German stocks. With the market reach and asset choice through Interactive Brokers, you can now do the same style of trade from your desktop and monitor it in real-time. Traders can also queue up conditional orders and essentially trade 24 hours as markets close and open around the globe.
Interactive Brokers is unparalleled in its market reach and asset variety.
TWS was our strongest overall trading platform with powerful tools and a high level of customization.
The direct access to exchanges worldwide allows for 24-hour trading.
You can fund your account in many different base currencies and the conversion at market rates for non-native currency transactions is directly supported through the platform.
Interactive Brokers offers the lowest margin interest of all the brokers we reviewed.
Taking full advantage of the international trading tools requires investors to use TWS, which can be daunting for non-traders.
Interactive Brokers still uses a fee-based pricing structure for trades, albeit a modest one.
Other International Trading Considerations
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.
Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on its platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting thousands of data points that we weighed into our star-scoring system.
In addition, every broker we surveyed was required to fill out an extensive survey about all aspects of its platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of its platforms at our offices.
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. To determine the best brokers for international trading, we focused on which firms offered the largest selection of assets across international markets. After that, overall platform functionality and variety of order types were also measured as these are important to successful trading when undertaking position management in markets that span the globe.
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.