Special Report

Making Your First Overseas Trade
How to Buy and Sell Stocks Around the Globe without Leaving Home By Jeff D. Opdyke

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whose deep pockets attract the interest of private bankers and white-shoe U.000. exchanges. 3 .-listed opportunities are exceedingly confining. In the last couple of years.-based account makes the prospect that much more compelling.. And you don’t even have to set up private-banking relationships with financial institutions in foreign lands.S. In fact. you’ve had the opportunity to buy and sell foreign securities directly overseas for years. too. Gone are the days of being limited to the 10. putting money to work in overseas stock markets was largely the province of institutional investors and the über-wealthy.S. The next instance of Google-like growth is taking place east of Wall Street… and sometimes west.S. and sometimes south. from exchange-traded funds to ADRs to the Pink Sheets. in the heart of the hundreds of local markets that span the globe. you’ll need to invest at least as much as it costs to make your first trade. And the fact that you can do so from a U. if you want to directly trade in the world’s major stock markets you don’t even have to leave home.S. you can sit at your kitchen table in Boston or San Diego or Mountain Home. though. You can also put behind you the eternal quest for the “next Apple or Google. though. There are many ways to trade the world’s markets on the U. a small collection of discount and online U. typically the minimum needed to open a brokerage account. What many investors don’t realize is how easy (and lucrative) it is to invest in those foreign stocks. But today you’re no longer locked out of that game. Nowadays. and trade stocks directly in markets stretching from Paris to Hong Kong. Diving Headfirst into a World of Overseas Opportunities Truth is. you. regardless of the size of your wallet. In practical terms. one upgrade or downgrade at a time. those U. have the opportunity as an individual investor to trade stocks directly overseas. brokerage firms has begun offering individual investors direct access to foreign stock markets. brokerage firms that cater almost exclusively to the moneyed crowd. exchanges — many of which have been analyzed to death by the financial press and manipulated to extreme highs or lows by the rating services that move markets. It’s just that most investors never realized they could open a brokerage account in a foreign country.000 or so securities on the U. Sydney to London… and numerous places in between.S. Today. Ark. you can start building your overseas wealth with as little as $2.S. But in comparison to the tens of thousands of stocks that exist outside America. Now.” These explosive opportunities do exist… but not on the Nasdaq or NYSE. directly on foreign exchanges.Making Your First Overseas Trade How to Buy and Sell Stocks Around the Globe without Leaving Home Are you ready to go global with your greenbacks? Until recently. Sometimes north. too.

why limit your investment universe when you don’t have to? Why let other savvy investors grab all the profits in foreign markets when you can invest there.S. Before I explain where to find the best brokers that will let you trade overseas. there’s something you should know… …there are a lot of overseas markets. our recommendations typically fall into one of three categories: Deep value: These are typically blue chip stocks that are undervalued. Brazil. too? Because we don’t think you should limit your options.As economies around the world have grown over the past decade. One or more of the brokerage firms we detail below will let you trade on those markets from inside the U. brokers don’t let you trade in all of them from your account. that give you access to these markets. The companies that fit this category are typically smallto mid-cap stocks that have the same explosive growth potential of the economy they are in. But given the expansion of U. fund and manage trading accounts here in the U. we’ve often limited ourselves to the ADRs and Pink Sheet-listed shares for logistical reasons. Hong Kong. and U. Given that. we’re not limiting ours. But they’re more than just momentum-riders — they tend to represent good value. For years. investors. used to be more than half of the world’s total market capitalization. which helps to minimize risk. but with incredible opportunities for profit. The U.S. Japan and Australia. GARP (Growth at a Reasonable Price): This kind of growth drives the trades we place in rapidly expanding emerging market economies. India. commodities like gold are “real assets” traded on a global scale and subject to a different world of market forces. The trades may take 12-18 months to play out. brokerage firms that make several foreign markets available to U. Real assets: Unlike traditional stocks and bonds. America’s weight has shrunk. As a general rule. However.S. Indonesia and others continue to expand their own economies and their own stock markets. immersing ourselves in the culture and witnessing firsthand the economies of these countries in action. but you’ll also find it easy to open.S. conservative investors. we at The Sovereign Individual will be writing increasingly about the opportunities that exist directly on foreign markets. and they are ideal for income-oriented. This is why our recommendations will focus on Western European and major Asian exchanges. our research has included trekking to the far corners of the globe — kicking the tires on the companies that capture our attention. Today.S. Not only are these the places where consumerism among a booming middle class is escalating at a rapid clip. Our primary focus will be Western Europe and the major markets in Asia like Singapore. 4 .S. it’s less than half — and it promises to continue shrinking as China.

That would be too easy.-based EverBank. These are brokerage houses that not only cater to individual investors. Access: Do you demand online trading? Or. So we’ve pulled apart the offerings and compared them to one another so that you can determine which account makes the most sense for your needs. Morgan Stanley and the like will not trade in overseas markets for individual investors unless those clients are. including several developing economies. Merrill Lynch.evertrade. (www. are you OK calling to place your orders over the phone? The challenge is that no firm offers both the lowest cost and access to the greatest number of countries via online trading. your decision should center on three variables: cost.com) • Charles Schwab.fidelity. Instead.com) • Fidelity. the discount online brokerage firm. So let’s take a look at what each of these firms has to offer: Fidelity Let’s start with the biggest obstacle at Fidelity because it may deter you immediately. breadth and access. Where to Find the Brokers That Will Let You Trade Overseas For the most part.interactivebrokers. or. generally speaking. and each has its pros and cons.etrade.Our reasoning behind the trades we recommend through The Sovereign Individual will become clearer the more you use this service. the online brokerage.schwab. Now let’s turn our attention to making your first trade. the St. (www. you can forget about the big-name Wall Street brokerage firms. an online brokerage firm. Fla.com) • E*Trade. putting $50.000 to work — per trade. you have to weigh the different variables to determine what is most important to your needs. if you want to start building your global portfolio by owning shares in the local markets. Fidelity’s foreign-markets access is available to investors who either: Trade a minimum of 120 times a year and have $25. Louis brokerage unit of Jacksonville. mutual funds and retirement-services giant. Breadth: Some firms offer trading in a relatively small number of major markets. to $50 or more per trade. (www. Cost: Fees for trading overseas run from standard.000 to $100. (www. 5 . but they’re also the ones that offer trading directly on foreign stock exchanges: • EverTrade. Ultimately. low-cost online commissions of less than $10 a trade. the original discount trading firm. while others provide access to a score or more of markets. you should consider the firms listed below. As such.com) Each of these firms offers varying degrees of access to overseas markets.com) • Interactive Brokers.000 in household assets at Fidelity. (www.

If you don’t meet either of those two criteria. unless you require broker assistance. fees include a “PTM Levy” of £1 on transactions where the principal amount is greater than £10. Canada. Live trades only execute during the hours in which the market you’re trading is open. dollar terms. Canada.Have at least $1 million in household assets on deposit at Fidelity.S. Germany.004% of principal. Portugal and the United Kingdom. Japan. Live trades execute during the hours in which the market you’re trading is open. but be warned: This simply allows customers to buy and sell foreign stocks that trade in the U. ¥3. Paperwork: Assuming your accounts meet eligibility requirements. Portugal. Netherlands. Trading: As with Fidelity. your commission costs will increase. you can sign up online for Fidelity’s International Trading platform by logging into your account and navigating to International Investments. and a stamp duty of 0. Belgium. Italy. (It’s under the “What You Can Trade” link in the Investment Products section. those fall in the $14 to $35 per trade range. AUD$70. Germany. in U. €19. HK$600. dollar terms. that is a far riskier proposition than trading foreign shares directly in their local markets. and that tends to be its biggest weakness. Cost: Online trades are: Australia. generally in the Pink Sheets — and. Or you can place limit orders and not worry about it. a trading fee of 0.K. France. Belgium. Japan and the U. you can trade online. In the United Kingdom. Germany.S. Access: Six markets: Canada. Netherlands. kr400 NOK. £30. CAD$70. Norway. then here’s what the firm offers you: Access: 12 markets: Australia. Or you can place limit orders to execute when (and if ) the stock hits your predetermined price. Hong Kong. in U. Belgium. if you happen to be trading Tokyo or Hong Kong. Japan. those fall in the $47 to $77 per trade range. Norway.000 and a stamp duty of 0. CAD$19.S.) If you do meet Fidelity’s requirements. 6 . Portugal..005% of principal.) Note: Fidelity imposes additional fees in some markets.) E*Trade E*Trade has the smallest footprint of all the brokers offering direct overseas access. AUD$32.000. In Hong Kong. HK$250. (The firm does offer what it calls Foreign Ordinary Share Trading. Germany. fees on all buy and sell orders include a transaction levy of 0. ¥8. then you’ll have to be at your computer in the evening when tomorrow’s trading day is getting under way in Asia. United Kingdom. So.) For broker-assisted trades: Australia. £9. France. for instance.5% of principal on buy orders only. France. (As of fall 2010. (As of fall 2010.000. United Kingdom. in which case commission costs rise. France. Italy. Italy. kr160 NOK. then Fidelity is not for you. Trading: You can trade online. Hong Kong. Hong Kong. Norway.1% of principal. unless you want broker assistance — and if you do want broker assistance. Netherlands. Canada. €50. Japan. in most cases. Hong Kong. knowing your orders will fill when (and if ) the stock price reaches your predetermined level.

Hong Kong HK$350. ¥3. Belgium. Costs: Trading Canada online is US$8. Japan. France. Spain. All overseas trades go through that trading desk during U. log in and go to the global trading tan and click the link to activate your global-access account. Other foreign markets cost a minimum of $100 per trade or 0. Japan. Norway. This means that you call your broker and place your trade. United Kingdom. France and Germany. Japan. Russia. but also charges the highest commissions. CAD$19. particularly in Asian markets. Germany. Philippines. Sweden. Netherlands.m. Israel. Italy. Portugal. Japan. Canada. South Africa.500.) For broker-assisted trades: Canada. Trading: All trades are phone-based. Luxembourg. Germany. As such.Costs: Online trades are: Canada. €35. Mexico.S. ¥5. mainly in the developed world. EverTrade also charges additional fees that vary by market for stamp duties. Hong Kong.S. United Arab Emirates. Spain. CAD$55.) Paperwork: You need an “E*Trade Complete Investment Account. Switzerland. €19.S. Trading: All trades are phone-based. Italy. United Kingdom. France and Germany. Thailand. Ireland.S. £25. Eastern Europe. Mexico. Singapore. when the local overseas market is open. You just phone 7 . (Note that The Sovereign Society has an advertising relationship with EverBank. (In U.m. Australia. those fall in the $16 to $40 per trade range.S. United Kingdom. Finland. Denmark..399. are generally “overnight” orders. Denmark. Hong Kong.) Charles Schwab Schwab offers the broadest selection of markets. Netherlands. Hungary. Paperwork: All you need do is open a basic EverTrade brokerage account. exchange fees and other internal fees. Norway. Schwab operates an international-trading desk in Phoenix.95. New Zealand. Finland. and your broker places the trade to execute overnight in the U. whichever is greater. to 5:30 p. South Africa. but including a few interesting developing markets: Australia. and are executed in local markets during U. including several interesting developing markets in Asia. Greece. Access: 36 markets. dollar terms. those fall in the range of $40 to $65 per trade range. trading hours. Malaysia. EverTrade Access: 22 equity markets.5% of the principal amount. Austria. there is no additional paperwork.99. Thailand. many orders. Austria. Trading desk hours are 7:00 a. overnight hours. and may receive compensation if you choose to open an account. You can fill out the account application online and send the signed document to EverTrade. Cost: A flat $35 per trade. Czech Republic. Russia. Canada. dollar terms.” Once that’s established. New Zealand. (In U. Sweden. EST. France.99. United Kingdom. Switzerland. Hong Kong HK$299. £9.99. Turkey. Paperwork: If you already own a Schwab account. Africa and the Middle East: Argentina. Singapore. Indonesia.

(In U. Switzerland. Mexico. relatively complex. CAD$1. Japan. Hong Kong. It is. Interactive Brokers Interactive Brokers is largely designed for traders rather than investors. “relatively complex with a steep learning curve. You can choose to pay based on a “bundled” or “unbundled” commission structure. and once the account is open you can add additional markets. Sweden. Belgium. Hong Kong. the firm also offers a basic “Web Trader” platform that is simplified for those who don’t need the complexity of a workstation. like its workstation. India. Mexico. are bundled.000 for an IRA. France.Schwab to place an order to buy/sell foreign shares and you will be connected with Schwab’s foreigntrading desk. dollar terms. Canada. Austria. Access: 16 markets. contact that firm and get the process going. 60 pesos. Once you decide. AUD$6. Costs: Compared to other firms. which means all fees. Trading: Trading is online and tied to various types of platforms Interactive Brokers offers. India. meaning that you are more of a buy-and-hold investor. Interactive Brokers imposes an account minimum of $10. Sometimes. As such. Spain. 10 francs. HKD$18. Italy.) Paperwork: Applications are available online. Germany. as the company calls it. though for an average investor the bundled approach seems to be more cost-effective. Australia. I find that visuals help. That’s why I’ve included a chart at the end of this trading manual that examines these brokers side by side — with the exception of Fidelity. then you will have to pay money each month to keep your account in good standing. If your plan is to trade according to the recommendations our council of experts makes through 8 . Minimum bundled costs are: Canada. those fall in the $1 to about $10 range. Euro markets. the next step is up to you. Sweden. The firm’s commission structure is built around relatively active trading. for instance. Interactive Brokers’ commission structure is.S. ¥450. Switzerland. the firm will impose a minimum charge on the account. Active traders might want to unbundle for various reasons. You have to determine which of those accounts best fits your investment needs. The firm. offers a “Trade Workstation” that you download to your computer. £6.000. €4. levies and such are wrapped into a fixed commission rate per contract. 30 kronor. 50 rupee.” Conversely. by default. duties. and if your account does not generate a certain amount of income each month. or $5. United Kingdom. United Kingdom. Japan. All new accounts. Now You’re Ready to Make Your First Trade At this point. either from commissions or other fees. You must choose which market you want to trade in. all generally developed: Australia. Netherlands. if you are not an active trader.

With that completed.com. you’re ready to go global… and you’re ready to follow us into the opportunities we see emerging all over the world. Still.The Sovereign Individual. Jeff is the Senior Editor of The Sovereign Individual and editor of the new Emerging Market Strategist investing service at The Sovereign Society.com. Jeff’s passion is finding the renegade plays “on the ground” in overseas markets. Western Europe and major Asian markets. Jeff Opdyke has been investing directly in the international markets since 1995. where cash easily flows across borders. As we uncover those opportunities. we will tell you exactly how to place the trade using whichever brokerage firm you’ve chosen. dollar. remember that the bulk of our trades require access to the U. It’d be wise to factor that into your decision. Go forth now and open an account — a world of profits awaits! Jeff Opdyke As a lifelong world traveler. See pages 10 and 11 for an easy-to-read chart detailing the various brokers. for that you’ll need to venture outside America and open brokerage accounts directly in foreign countries (also very easy). and you’ll be profiting off the growth of companies that are serving the needs of consumers and businesses in other economies around the world. Tokyo and Hong Kong. and learn more about EMS at SovereignSociety. After nearly two decades as an author and reporter for The Wall Street Journal. You won’t have access to all the opportunities that exist overseas. 9 . shores.S. That’s where the real opportunities are these days.. the truly sovereign individual has money at work globally. And now you have an easy way to access those global markets through U. Follow Jeff’s blog at GlobeTrottingInvestor. brokerage accounts offering you access to the wider world of stocks. That’s how easy it is to go global without ever leaving the comfort of U. In doing so. And that’s it. In the modern age. and uncovering those explosive trends long before they become mainstream. you will be protecting your wealth against the long-term decline of the U. you will have a great many chances to put your wealth to work in the world’s major equity markets.S.S. such as London.S. making him one of the true pioneers of foreign trading.

The trading desk executes your trade when the foreign market you chose is open. Russia. United Kingdom Best Suited For: For the self-directed trader who is comfortable trading online (or on your smartphone). You can apply online. Sweden. Norway. E*Trade offers access to six overseas markets. AUD 70 CAD 19. Germany. EUR 50 HKD 250. Netherlands. broker-assisted trades) Japan (online trades. Fidelity 800-343-3548 USD 25. Denmark. Italy. South Africa. Japan. Hong Kong. EverTrade 888-882-EVER All foreign trades are phone based. CAD 70 EUR 19. to a dozen overseas markets broker-assisted trades) in real time.K.99 Available Markets Canada.000 NOK 160. Italy. You’ll have access Canada (online trades. France. with low account minimums and commissions. HKD 600 JPY 3.99 HKD 299.00 JPY 3.399. New Zealand.000 in household assets and trade 120+ times per year. NOK 400 GBP 9. broker-assisted trades) United Kingdom (online trades. but all foreign trades are done by phone. Thailand. Finland. Canada. Hong Kong. No account minimum $35/trade Austria. which means with Asian markets the trades will execute overnight.Broker E*Trade International Investing11-800ETRADE-1 Minimum Investment USD 500 Commission CAD 19. GBP 30 Australia (online trades. Germany. but you’ve got to trade a lot or keep a lot of France.000. Singapore. even qualify for the account. Australia. EverTrade gives you access to 22 markets with no account minimums. Mexico. broker-assisted trades) Norway (online trades. money invested in Fidelity to Portugal (online trades. U. or USD 1 million in household assets on deposit AUD 32. Belgium. France. Netherlands.99 EUR 19. broker-assisted trades) 10 . Germany. JPY 8. Switzerland.00 GBP 9. Japan. broker-assisted trades) This is aimed at the highernet-worth individual or the active trader. broker-assisted trades) Hong Kong (online trades. The company just lowered commissions to a flat $35 a trade. Spain.

Japan.000. and like EverTrade they take your orders during the day and execute them overnight. Turkey. $100. United Kingdom Australia. Mexico. France. Spain. Japan. 11 . Austria. Hungary. Italy. South Africa. Netherlands. Spain. Czech Republic. Sweden. Singapore. AUD 6 IRAs: USD EUR 4 5. Sweden. Finland. Mexico. Belgium. Greece. Indonesia. Austria. New Zealand. Israel. Hong Kong.” You can avoid fees if the account generates a minimum amount of income for the firm each month. Thailand. Malaysia. The account minimum is low (at $1. Canada. Germany. Minimum Investment USD 1. other.000). Switzerland. Denmark. Luxembourg. US$8. which means you can trade its 16 overseas markets online. United Arab Emirates. Available Markets Argentina. Germany. Switzerland. United Kingdom Best Suited For: You get access to an impressive 36 overseas markets at Schwab. France. IAB offers both a Web platform and desktop software designed with traders in mind. Belgium. Philippines. Italy. Hong Kong. but the trade-off is that it’ll cost you $100 per transaction.000 CAD $1 HKD 18 INR 50 JPY 450 MXN 60 SEK 30 CHF 10 GBP 6 Investors may shy away from the word “Active” in “Interactive. Canada.95. Ireland. Norway. India. Russia. Netherlands. Interactive Brokers Platforms: Trader Workstation WebTrader 1-844-4IBBRKR USD 10.000 Commission Canada. Australia.Broker Charles Schwab 800-992-4685 All foreign trades are phone based. Portugal.

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