Many investors seek opportunities to benefit from developing markets around the globe. The stock markets of smaller economies sometimes offer dramatic profit potential compared to the returns of major indexes. According to BusinessWeek, a Standard & Poor's index of twenty-two developing markets returned almost 400 percent in gains between 2002 and 2007. The activity and media attention of these markets leads many investors down the path of global stock trading. Fortunately, access to world markets is getting continuously easier.
Instructions
1. Identify a broker that offers access to stocks on international exchanges. Demand for such access is forcing many brokers to add this feature to their trading platforms. ETrade was one of the first brokers to extend this potential to its clients. Their "Global Trading" account gives investors full access to stocks in six foreign markets, including Canada, France, Germany, Hong Kong, Japan, and the U.K. Global Trading, Ltd. offers access to twenty-two worldwide exchanges.
2. Apply for an account with a broker offering access to global stock exchanges. If you are an existing customer of the broker, complete the necessary application process to add global trading to your account privileges.
3. Search for stocks on international exchanges that interest you. While the process is similar to finding and buying stocks on domestic exchanges, there is one notable difference. International stocks are usually priced in their local currency.
4. Convert the price of the stock from its local currency to your base currency. Some brokers may simplify this process by showing the conversion on the same page as the stock listings, in addition to the local price. However this is not always the case. Always be sure you understand the effect an international stock purchase will have on your account by carefully discerning the equivalent value of the transaction in your own currency.
5. Consider the local time in the country where the international exchange resides. All stock exchanges have regular business hours, and trading is not available around the clock. Additionally, as with U.S. exchanges, the limited trading often available just prior to and after market hours is highly risky, so be sure you are making your purchase during the local exchange's regular session.
6. Purchase shares in the international stock in the same manner as purchasing shares from your own country. Once enabled for your account, global trading performs in the same fashion as domestic stock transactions.
