Trading US stocks from the UK

skillboy

What is the best way to trade US stocks from the UK?

I was going to use Hargreaves Lansdown but their costs are way too high with £11.95 per trade plus you have to lose twice with the FX as they first convert your GBP to USD when you buying US stocks, then back again from USD to GBP when you sell. This adds up to 2% in costs onto any trade.

I have looked at Charles Schwab USA accounts and they seem pretty good with low commissions ($4.95 per trade).

Any other online dealers that you recommend that are reputable with competitive commissions AND allow you to open USA denominated accounts?

AnotherJoe

interactive investor have US dollar (and euro ) denominated accounts
So once youve incurred the Fx costs then there are no more until you take money out back into sterling.

I used to use them and only moved away because i stopped frequent trading in US shares otherwise it worked fine

See recent conversation https://forums.moneysavingexpert.com/discussion/comment/76219963#Comment_76219963

seacaitch

skillboy wrote: »

What is the best way to trade US stocks from the UK?

Do you mean invest in or trade?

Particularly for frequent trading of stocks (+futures, options, fixed income, forex), and with margin available, then Interactive Brokers (IB) is a common low-cost, high-feature choice: https://www.interactivebrokers.co.uk/inv/en/main.php

But, if you do not know what you're doing then the poor house will rapidly beckon!

What are you planning on doing, and do you have prior experience of whatever that is? If not experienced, it can be easy to get out of your depth, so "eyes wide open" is absolutely essential.

Even if not trading, and simply investing long term in single-name stocks, then you need to have some idea of what you're doing and appreciation of the risks involved.

bowlhead99

Interactive Investor and Interactive Brokers (no relation) will let you hold dollar balances in their cash accounts, and the latter has lower rates for FX. However IB as a US-centric firm doesn't offer UK tax wrappers such as ISA or SIPP, and I've never used them ( I have used II, when they were TD Waterhouse and then TD Direct).

Schwab's cheap brokerage service doesn't have UK tax wrappers either, and their minimum balance to open an account is $25k - which may put off casual punters who just want to buy a few shares in each of the FAANGs or follow some online tip sheets rather than invest in a meaningfully diversified set of direct US holdings as part of a much bigger investment plan.

Another more UK- based offering is from IG.com, their US trading commission rates are not too bad, and they do offer ISAs. And (outside an ISA) you can trade using spread bets or CFD rather than buying the underlying stock, if you are fancying yourself as more of a trader than investor .

AnotherJoe

bowlhead99 wrote: »

Interactive Investor and Interactive Brokers (no relation) will let you hold dollar balances in their cash accounts, and the latter has lower rates for FX. However IB as a US-centric firm doesn't offer UK tax wrappers such as ISA or SIPP, and I've never used them ( I have used II, when they were TD Waterhouse and then TD Direct).

Schwab's cheap brokerage service doesn't have UK tax wrappers either, and their minimum balance to open an account is $25k - which may put off casual punters who just want to buy a few shares in each of the FAANGs or follow some online tip sheets rather than invest in a meaningfully diversified set of direct US holdings as part of a much bigger investment plan.

Another more UK- based offering is from IG.com, their US trading commission rates are not too bad, and they do offer ISAs. And (outside an ISA) you can trade using spread bets or CFD rather than buying the underlying stock, if you are fancying yourself as more of a trader than investor .

The dollar account doesn't work for ISAs (not sure about SIPPs) with ii.

I believe that's a condition of the way ISAs work rather than how ii runs theirs.
Bare trading account only.

bowlhead99

AnotherJoe wrote: »

The dollar account doesn't work for ISAs (not sure about SIPPs) with ii.

I believe that's a condition of the way ISAs work rather than how ii runs theirs.
Bare trading account only.

Yes you are right that foreign currency cash is not an allowable asset for a stocks and shares ISA.

Apologies if my post was misleading. The point was simply that Schwab and IB might have low trading costs but they have no UK tax wrappers and the saving on FX or dealing costs might be dwarfed by the consequences of having to pay 20% CGT on all your gains, and the PITA of having to keep detailed tax records especially if 'trading' rather than long term investing. Whereas II and others will offer you an ISA or pension wrapper.

It's true that the II ISA, like anyone else's ISA, can't hold dollar currency.

brianposter

Given the choice of IB and Schwab I would definitely go for Schwab as they have a far better website and offer old-fashioned standards of service.

Thrugelmir

skillboy wrote: »

I was going to use Hargreaves Lansdown but their costs are way too high with £11.95 per trade

That's very reasonable for overseas stocks. Are you sure that's the full charge?

stphnstevey

Freetrade (no cost trading) do allow US stocks but have a FX rate

Trading 212 apperently have free trading and no fee FX rate (although I have been unable to confirm this on website)

Checkout reviews of these as some have been poor

stphnstevey

Thrugelmir wrote: »

That's very reasonable for overseas stocks. Are you sure that's the full charge?

That's just the dealing charge, there is is an FX charge on top

hoc

Can not recommend IG.



1) Foreign currency can only be held in a traditional dealing account.


https://www.ig.com/uk/help-and-support/investments/sipps/what-currencies-can-i-deposit-on-my-share-dealing-or-smart-portf


Their claim HMRC does not allow holding foreign currency in SIPP as well as ISA is incorrect, there is no legal requirement to operate SIPP only in GBP.


2) While they do offer a SIPP it is explicitly through a third party, not just administered in the background by another company which is common, you need to deal with a completely different company and they charge fees from 200 per year.


https://www.ig.com/uk/help-and-support/investments/sipps/what-does-it-cost-to-set-up-an-ig-sipp


II are best if looking for a single provider, they have ISA and SIPP allowing holding foreign currency in SIPP are UK based without needing to deal with third parties and have competitive dealing costs. The UK providers offering slightly cheaper dealing fees are only headline, they sting you with currency exchange.


If SIPP and ISA aren't important then IB are one of the cheapest in the world and allow access to everything, in fact it can be overwhelming.