Trading Japanese stocks is simple because of the comprehensive interlinkages between the American and Japanese economies. Many major Japanese stocks are cross-listed on American exchanges, making it possible to trade the securities using dollars with an American brokerage account for no additional fees. There are some Japanese stocks that are only listed domestically. To trade those, you must open up a Japanese brokerage account and use yen (the Japanese currency) to use it.
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Review the Japanese stocks that you're interested in listed on American exchanges (see Resources 1 for a list of stocks cross-listed in American exchanges). You can also invest in mutual funds that collect a variety of Japanese stocks to gain broad exposure to the market. Still, Japanese stocks listed on American markets are a relatively small portion of the opportunities available for stock traders interested in Japanese companies.
Open a brokerage account with access to Japanese markets. Some domestically operated brokerages have access to Japanese exchanges. Others do not. Contact the customer service department of your brokerage if you're confused about whether or not it provides access to Japanese stocks. If you open a brokerage account in Japan, don't expect to receive English customer service.
Trade stocks listed on Japanese exchanges once you ensure that you have a brokerage account with access to them.
Tips and warnings
- Unless you're willing to invest a lot of time and effort into learning about the Japanese market, it's often best to stick to trading major Japanese stocks. Smaller companies can be extremely volatile and challenging to learn about.
- Trading in foreign stocks exposes you to multiple additional risks. Unless you can speak Japanese, you'll have trouble finding analysis of Japanese equities in your native language. Also, fluctuations in currency exchange rates can easily either deplete or strengthen your investments in an unpredictable manner.
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