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What are the Best Tips for International Online Trading?

By Dana DeCecco
Updated Feb 15, 2024
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The best tips for international online trading will depend on the investor's goals and amount of money he or she wants to invest. Investing in exchange traded funds (ETFs) can be a convenient option. Trading in the foreign exchange (FX) markets also is a popular choice. No matter how an investor chooses to engage in international online trading, doing research about strategies and keeping up with current events and trends are important.

Internet-based discount brokers have made international online trading a viable alternative for trading stocks, commodities and currencies. Portfolio diversification can be enhanced because of the availability of an array of international assets. Broad-based investments provide a hedge against systemic risk. International online trading has made this type of investing available to the home based trader.

Discount brokers and investment banks have provided access to internationally traded stocks and bonds. In the United States, buying individual international stocks can be accomplished through investing in American depositary receipts (ADR). These securities represent ownership in a foreign company and are available through various investment banks. Fees and a minimum investment size might apply.

A more convenient way to invest in international stocks might be through ETFs, which require a smaller amount of investment capital, making them a better choice for the average investor. Many ETFs do not actually own the shares being traded but track an index of these shares. ETFs are easy to trade and are available for the international stock and bond markets.

Many ETFs track the major indexes of individual countries. The investor who believes that a certain country will experience above-average growth can invest in the general economic outlook of that particular country. This broad-based approach eliminates the risk involved with investing in an individual company. Some ETFs track specific economic sectors, providing a means to zero in on a particular segment of industry.

Global ETFs are widely varied and easily accessible to the investor interested in international online trading. Various online resources list, rate and track the performance of international ETFs. Decision support tools are available for the retail investor.

Commodities, by nature, are international investments. Precious metals, oil and agricultural products are suitable for international online trading. A diverse international commodity index is also available to the trader who wants to invest in general global commodities. Online resources can help investors with education and trading of global commodities. Advisories and tracking services can aid the trader with investment decisions.

Investors who don't have a futures trading account can participate in commodity trading through various ETFs. These ETFs were created to track the performance of commodities traded in the futures market. Some of these ETFs are diversified into industries such as agriculture, energy and metals. Others are more focused on individual commodities such as gold, oil and livestock.

Some commodity ETFs track the companies related to the commodity rather than the commodity itself. Financial instruments known as exchange traded notes (ETNs) track the price of the commodity itself more closely. ETNs are also available for broad commodity sector exposure or individual commodity tracking.

Foreign exchange is the largest form of international online trading. Currency trading is available in the form of spot FX, currency futures and ETFs in the equity market. Foreign exchange is the largest and possibly most volatile market in the world. This highly leveraged type of trading should be approached with great care. Many online resources are available for education, training and advice about trading international currencies.

WiseGEEK is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

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