Finding the Right International Trading Opportunities

27-08-2017 | Ramona |

International stock trading has become popular over the years as a way to diversify one’s portfolio and see a decent return on investment.

Trading on the international front can also be an intimidating endeavor if you are unsure of what you are doing or unaware of the risks involved.

Of course, you can ask your broker if they offer the service, that will make things a million times easier for you. Beyond that, choosing the right stock to invest in is the tricky part.

Ease Yourself Into It

If you have never worked with international trading before, the easiest thing to do is to start simple. Focus on a franchise that is trading on international markets.

If you decide to embark on investing in franchises, it is helpful if you understand how to start a franchise. Understanding the process helps you interpret their stock growth better. Understanding their stock growth gives you a snapshot of how successful the company is.

Of course, you must factor in some international circumstances that can result in slow growth; other countries have some laws and regulations that vary from ours that can impede quick growth for a franchise.

If you are utilizing a broker for this new endeavor, they should be able to help you understand the processes.

Buy The Lot

If you want to take it to a personal level, purchasing board lots may be the perfect remedy for you. Board lots are purchased from the country you are looking to invest with.

Each one has their own requirements but often there is a set price for a unit of stock and you have to purchase a specific amount of stocks, or a board lot, in order to complete the investment.

In Canada, the board lot is based on the price of the individual security. If the share cost 10 cents, you may be required to purchase 1,000 shares. But if the share costs a dollar, you may only be required to purchase 100 shares. Hong Kong is also based on the security but they require a much higher purchase of shares, currently at 50 to 100,000 shares each investment.

This is a very direct way of investing and can get very difficult, especially if you are new to the world of investing. It is absolutely important to find a broker who can help you navigate the process and risks associated with the direct trading.

Exchange the Currency

If you really want to gamble, you can exchange the currency. Buying and selling foreign currency can take place in the foreign exchange known as FOREX.

This is a volatile exchange as you are relying on the change in market to increase the value of the currency so that you can sell and make a profit.

It sounds simplistic, and it is, but it requires a keen eye to watch all that is taking place within a country. Typical situations that influence the value of currency are:

  • Politics and government policies
  • Supply and demand of the exports
  • Trade
  • Fiscal health
  • Exchange control programs
  • Economic events
  • National and international interest rate fluctuations
  • Currency devaluation
  • Sentiment of the marketplace

When a country is doing well, their currency will reflect it as such. When their country is in upheaval or financial crisis, their currency will reflect it as well. This is truly only a form of trade recommended for those who aren’t worried about losing and love to take high risks.

International trading can be similar to trading here at home in the U.S. but it can also be a difficult endeavor. Always be sure you get information on trades from a reliable source and invest only what you can afford to lose.

Once you get the hang of international trading, you can explore with more risks and enjoy higher returns.

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