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Monday, 14 October 2013

Step 7 Action

Your research is done, your overseas brokerage account is open, and you are finally prepared to make your first investment in a foreign market. However, there are still many things to be aware of because as usual, even things that seem simple are bound to be at least slightly different in a foreign country.

The process of buying stocks can be different depending on where you do it. In most developed countries, you can buy stocks either over the internet, or the phone. For some countries with less developed financial markets, you may need to be at the brokerage in-person for your first stock purchase with that account, or possibly even every purchase with that account.

As is probably the case in your home country, there are several different types of purchase orders. A market order will execute as soon as it can be, at the next available price.  A limit order will buy the stock for a price no higher than the one you set, and a stop order will buy the stock for no lower than a price that you set. These are the three most common types of buy orders.


One piece of advice that you are unlikely to hear, is this: Be extremely careful with market orders. Stock prices can fluctuate rapidly and with little notice, especially in an international setting with less developed and/or less active markets and the price that you may think you are paying for the stock can often be very different once your order executes. There is usually no reason to place anything other than a limit order.

Other factors to consider are the different time zones and trading hours that each market has. Some exchanges offer “after-hours trading”, which allows investors to place orders of limited quantity and variety after the official close of the market. Some exchanges will take a lunch break, or be closed on a national holiday that you are not aware of. Most western countries practice daylight savings time, where the time throughout the country will differ by an hour at certain times of the year.

Some of the things above that were mentioned may seem of little importance, but much money has been lost by countless investors who simply had bad timing.

----------stay tuned!----------

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