You can trade international stocks through a U.S. brokerage account, but the process and costs differ depending on which country's stocks you want to buy

Most U.S. brokerages let you buy stocks listed on foreign exchanges — companies traded in Canada, the UK, Japan, Germany, and dozens of other countries — without opening a separate account abroad. You place the order through your existing brokerage, the trade settles in the foreign currency, and your brokerage handles the currency conversion. The main differences from buying U.S. stocks are the trading hours (foreign markets open and close on their own schedules), currency risk (the value of your investment moves with both the stock price and the exchange rate), and sometimes higher fees.

The easiest route for most people is buying American Depositary Receipts (ADRs), which are certificates representing shares of a foreign company, traded on U.S. exchanges during U.S. market hours. If you want to buy the actual foreign stock directly, you need a brokerage that offers access to international exchanges, and you place the order during that exchange's trading hours.

Key Takeaways

  • American Depositary Receipts (ADRs) let you buy foreign company shares through a U.S. brokerage during U.S. market hours, without currency conversion or international settlement delays.
  • Direct trading on foreign exchanges requires a brokerage with international market access, happens during that country's trading hours, and involves currency conversion fees.
  • Currency fluctuations affect your returns — if the foreign currency weakens against the dollar, your investment value drops even if the stock price rises.
  • Most U.S. brokerages charge the same commission for international trades as domestic ones, but foreign exchanges may charge their own fees that vary by country.
  • Tax reporting for international stocks is the same as for U.S. stocks on your federal return, but some countries withhold taxes on dividends that you may reclaim.

American Depositary Receipts (ADRs) versus direct foreign stock trading

An ADR is a certificate issued by a U.S. bank that represents one or more shares of a foreign company's stock. The bank holds the actual shares in the foreign country, and you own the ADR, which trades on a U.S. exchange (usually the NYSE or NASDAQ) in U.S. dollars. When you buy an ADR, you are buying during U.S. market hours, in dollars, with no currency conversion on your end — the bank handles it behind the scenes.

Direct trading means buying the actual stock on a foreign exchange — the Tokyo Stock Exchange for Japanese companies, the London Stock Exchange for UK companies, and so on. You place the order during that exchange's trading hours (which may be overnight or early morning U.S. time), and your brokerage converts dollars to the foreign currency, settles the trade on that exchange, and holds the shares in your account. Direct trading gives you access to smaller companies and stocks that do not have ADRs, but it is slower, more expensive, and requires more attention to timing.

For most U.S. investors, ADRs are the simpler choice. They trade like U.S. stocks, settle in two business days like U.S. stocks, and you avoid the complexity of currency conversion and foreign settlement. If the company you want to buy has an ADR, that is usually the path to take.

Which U.S. brokerages offer international stock trading

Nearly every major U.S. brokerage offers ADRs — they trade on U.S. exchanges, so any broker with access to the NYSE or NASDAQ can sell them to you. Brokerages that offer direct access to foreign exchanges include Interactive Brokers, TD Ameritrade (now part of Charles Schwab), Fidelity, E*TRADE, and Schwab itself. Smaller or discount brokerages may not offer direct foreign exchange access, so check your broker's website or call them to confirm before opening an account.

If you already have an account at a major brokerage, log in and search for the company name or ticker symbol. If an ADR exists, it will appear in the search results. If you want to trade directly on a foreign exchange and your current broker does not offer it, you can open a second account at a broker that does — there is no requirement to consolidate all your holdings in one place.

Currency conversion and exchange rates

When you buy a foreign stock or ADR, you are exposed to currency risk. If you buy a British stock for £100 and the pound weakens against the dollar, the value of your investment in dollars falls even if the stock price stays the same. The reverse is also true — if the pound strengthens, your investment gains value from the currency move alone.

With ADRs, your brokerage converts dollars to the foreign currency at the time of purchase and converts back to dollars when you sell. The exchange rate your broker uses is usually close to the market rate, but brokers add a small spread (markup) to the conversion. This spread varies by broker and by currency — major currencies like the euro and pound have tighter spreads than smaller currencies.

With direct foreign stock trading, the same currency conversion happens, but the timing is different. Your brokerage converts dollars to the foreign currency when you place the order, holds it until settlement (which may take longer than U.S. settlement), and converts back when you sell. If the exchange rate moves between the time you place the order and the time it settles, you absorb that movement.

Trading hours and settlement timing

U.S. stock markets are open 9:30 a.m. to 4 p.m. Eastern Time on weekdays. ADRs trade during these hours, so you can buy and sell them whenever the U.S. market is open. Foreign exchanges operate on their own schedules — the London Stock Exchange opens at 8 a.m. GMT (3 a.m. Eastern), the Tokyo Stock Exchange opens at 9 p.m. Eastern the previous day, and so on. If you want to trade directly on a foreign exchange, you have to place your order during that exchange's trading hours, which often means trading before or after U.S. market hours.

Settlement also differs. U.S. stocks settle in two business days (T+2). Most foreign exchanges settle in two business days as well, but some countries use different settlement periods. Japan, for example, settles in three business days (T+3). Until settlement is complete, the shares are not fully yours — they are held in a pending state. This matters if you want to sell quickly or if you are watching your account balance closely.

Fees and costs for international stock trading

Commission fees for international stock trades vary by broker. Many brokerages charge zero commission for both U.S. and international stock trades, but some still charge a flat fee (often $5 to $15 per trade) for direct foreign exchange trades. ADRs, because they trade on U.S. exchanges, are usually commission-free at brokers that offer commission-free U.S. stock trading.

Beyond commission, you pay currency conversion fees. These are built into the exchange rate your broker quotes — you do not see a separate line item, but the rate is slightly worse than the mid-market rate. The difference (the spread) is typically 0.5% to 2% depending on the currency and the broker. For a $10,000 trade, a 1% spread costs you $100.

Some foreign exchanges charge their own fees — transaction taxes, regulatory fees, or exchange fees — that are passed to you. The UK, for example, charges a 0.5% stamp duty on stock purchases. These fees vary widely by country and are not always transparent until after the trade settles. Ask your broker whether the country you are trading in has additional fees before you place a large order.

Tax reporting for international stocks and dividends

On your U.S. federal tax return, international stocks are reported the same way as U.S. stocks. Capital gains (the profit when you sell) are reported on Schedule D, and dividends are reported on Schedule B or Schedule 1, depending on the amount. You report gains and losses in U.S. dollars, using the exchange rate on the date you sold the stock.

Many foreign countries withhold taxes on dividends paid to U.S. investors. The withholding rate varies by country and by tax treaty between the U.S. and that country — it is often 15% to 30%. When you receive a dividend from a foreign stock, your brokerage deducts the withholding tax and deposits the remainder to your account. You can reclaim some or all of this withheld tax by filing Form 1118 (Foreign Tax Credit) with your federal return, but the process is complex and only worthwhile if you have significant foreign dividend income.

If you hold international stocks in a tax-advantaged account like an IRA or 401(k), the withholding rules are different and often more favorable. Consult a tax professional if you plan to hold significant foreign dividend-paying stocks in a taxable account.

How to find and research international stocks

Most brokerages have a stock screener or search function where you can look up a company by name or ticker symbol. If the company has an ADR, the ADR ticker will appear in the results. ADR tickers usually resemble the home-country ticker but with a different suffix — for example, the ADR for Unilever (a British-Dutch company) trades under the ticker UL on the NYSE, while the home-country ticker is ULVR on the London Stock Exchange.

To research a foreign company, start with the company's investor relations website, which usually has financial statements in English. Financial data aggregators like Yahoo Finance, Google Finance, and your brokerage's research tools often include foreign stocks and ADRs. Be aware that financial statements from non-U.S. companies may use different accounting standards (IFRS instead of GAAP), so the numbers may not be directly comparable to U.S. companies.

Currency and geopolitical risk are real considerations. A company's earnings may be strong, but if the country's currency weakens or political instability rises, your investment can lose value. Diversification across countries and currencies can reduce this risk, but it adds complexity.

Frequently Asked Questions

Do I need a special account to trade international stocks?

No. A standard brokerage account (individual, joint, or IRA) can hold international stocks and ADRs. Some brokerages require you to enable international trading in your account settings, but this is usually a checkbox on your account page, not a separate account.

Can I buy international stocks in a 401(k) or IRA?

Yes, most IRAs and self-directed 401(k)s allow international stocks and ADRs. Traditional and Roth IRAs at major brokerages have access to ADRs and often to direct foreign exchange trading as well. Check with your plan administrator or brokerage to confirm what is available in your specific account.

What happens to my shares if the foreign company goes bankrupt?

If you own an ADR, the U.S. bank that issued it is responsible for the shares held overseas. If the foreign company goes bankrupt, your ADR becomes worthless, but the bank's bankruptcy is separate. If you own the actual foreign stock directly, you have the same claim as any shareholder in that country — which may be less protection than U.S. bankruptcy law provides.

How do I know what the exchange rate is when I buy?

Your brokerage shows the exchange rate in the order confirmation before you submit the trade. For ADRs, the conversion happens automatically and is reflected in the dollar price you see. For direct foreign trades, your broker quotes the rate and the converted dollar amount before settlement.

Can I short-sell international stocks?

Some brokerages allow short-selling of ADRs, but short-selling of direct foreign stocks is less common and depends on whether the foreign exchange allows it and whether your broker has shares available to borrow. Ask your broker whether short-selling is available for the specific stock you want to trade.