Local exchange and foreign markets

This lesson shows how a Polish resident buys stocks and ETFs listed in Warsaw and abroad, how the access channels differ, and how to calculate the full cost of a transaction before the first order. It is for someone who already has an account or is choosing a broker and wants to compare price lists on one common basis.

Three routes of access to markets

Referring to the lesson Stocks and ETFs from scratch, there are three routes to the market. Each has a different set of costs and different obligations on the investor’s side.

1. A brokerage account on the local exchange. Stocks and ETFs priced in PLN (Polish złoty), issuer announcements through ESPI and EBI, and the Warsaw session. The account currency and the instrument currency match, so the result contains no currency risk.
2. A foreign or multi-market broker. American and European markets, often with the account currency in USD or EUR. Conversion between PLN and the account currency is a real cost that does not appear in the commission table.
3. A CFD on stocks. Price movement without classic ownership of the paper. A short position is sometimes easier to open, but holding it overnight is usually chargeable.

The choice depends on the horizon and on what you expect from the instrument: whether you want to own the paper together with the rights attached to it, or whether you are interested only in exposure to a price change. The answer to that question determines everything else — costs, taxes, and risk.

The local exchange: indexes, session, and ESPI announcements

The Warsaw Stock Exchange is the market where a Polish investor most often starts, and for good reasons: no currency conversion, familiar session hours, and access to the same information as other participants.

What to check before buying:

• average turnover and spread in the order book,
• the session and auction schedule — confirm exact hours with your broker, because they depend on the market and on daylight saving,
• ESPI and EBI announcements, because an unexpected publication can open the session with a gap,
• index membership. Companies in the main indexes usually have more turnover than those outside them.

Combining a thin company with leverage is a classic trap: the position is easy to open and much harder to close at a reasonable price. The mechanics of that phenomenon are described in the lesson Liquidity and spread on stocks.

Foreign markets and currency risk

By buying an instrument priced in USD or EUR, you add a second variable to the result: the exchange rate of the currency pair against the PLN. A fall in the dollar against the PLN can eat a stock profit expressed in PLN, and conversely — a rise in the rate improves the result even with a flat paper price.

ETFs registered in Europe are sometimes operationally more convenient for someone settling taxes in Poland, though that is not a rule. What counts are concrete parameters: the fund’s total cost, the spread on the exchange, the quality of index tracking, and whether your broker offers the ticker together with accounts in a separate settlement regime. Compare the offer with your broker, not in advertising materials.

An additional thread appears with foreign dividends. Withholding tax collected in the issuer’s country is settled through separate mechanisms linked to double taxation treaties. It is not a simple subtraction from Polish tax and cannot be reduced to a single rate — confirm the rules at the source or with an adviser. Domestic rules for settling profits are described in the lesson Capital gains tax and brokerage costs.

Round-trip cost comparison protocol

Compare access channels on one basis — the full cost of one entry and one exit, expressed in PLN and related to the risk of the transaction.

1. Set the position value in PLN. Convert the order value into PLN at the rate the broker actually applies, not at a rate from a news website.
2. Calculate the spread on your side. The spread is the difference between the bid and the ask in the order book. Multiply it by the number of shares.
3. Add the buy commission and the sell commission. Check whether the fee is percentage-based or fixed, and whether a minimum applies. Check the rates with your broker.
4. Add the conversion cost. If the account works in PLN while the instrument is in a foreign currency, conversion occurs twice: on entry and on the return to PLN. Check the broker’s currency spread, because it is sometimes hidden in the rate.
5. Add typical slippage. A market order on a thin instrument usually executes at a different price than the one visible at the moment of clicking.
6. Divide the result by the position value and by 1R. The first quotient shows cost as a percentage of turnover, the second — how much risk the cost eats.

round_trip_cost_PLN = spread × number_of_shares + buy_commission + sell_commission + slippage + conversion_cost
cost_as_percent_of_position = round_trip_cost / position_value × 100
cost_in_R = round_trip_cost / (distance_from_entry_to_stop × number_of_shares)

All numbers in the table are illustrative, and check commission rates and currency spread with your broker. The example does show a mechanism that is easy to overlook: with the same commission and the same market spread, the cost of a foreign transaction is several times higher, because conversion is counted twice. With less frequent trading that difference is sometimes acceptable. With frequent turnover it changes the assessment of the whole strategy.

Broker comparison table to fill in

Complete it for each account you consider. Compare rows, not brochures.

Session hours and market overlap

The Warsaw session runs during Polish working hours, while American sessions fall in the Polish afternoon and evening. Exact hours depend on the market and on the switch between summer and winter time, so confirm the current schedule with your broker before planning orders.

There are three practical consequences. First, part of the European and American sessions overlaps, which usually increases turnover and narrows the spread. Second, orders placed before the open or after the close go to auction, where execution can land far from the price at the moment of the order. Third, earnings published after the American session affect a Polish investor at night, and the effect is only visible at the open.

An instrument priced in a foreign currency in a PLN account adds currency risk that cannot be switched off by choosing a time. It can, however, be measured and included in position size.

When cost and calendar say do not trade

1. When you do not know the full round-trip cost in PLN. If you cannot state a single number, you also do not know how much the price must rise for the position to break even.
2. When the plan relies on leverage because capital ran short. That is a signal that the position is too large, not that the instrument is good.
3. When you buy a few hours before the issuer’s report. Volatility rises, the spread widens, and a gap can jump over the stop level.
4. When you have not checked whether the instrument is a stock, an ETF, or a CFD. The settlement method and holding costs differ, and the ticker name can be misleading.

Mistakes in choosing an access channel

• Choosing a CFD only because of a lower deposit. The absence of ownership and the cost of holding overnight are a real difference over a longer holding period.
• Treating currency conversion as a trifle. With frequent trading this cost is sometimes larger than the transaction commission.
• Assuming a brokerage account and a CFD account are interchangeable. Different rights, different supervision, and different rules for handling a broker’s problems.
• Ignoring accounts with a separate settlement regime. If long-term tax efficiency matters to you, check what the broker offers and confirm the rules at the source.
• Comparing brokers by a single line of the price list. The lowest commission per transaction does not mean the lowest total cost.

Measurable exercise

1. Choose one company from the main local index and one ETF listed abroad.
2. For both, record at your broker: buy commission, sell commission, minimum commission, currency spread, and available markets.
3. For a position with an illustrative value of 3,300 PLN, calculate the round-trip cost in PLN for both instruments — remember conversion on the foreign side.
4. Divide each cost by 1R equal to 99.00 PLN (illustrative) and record the result in the table.
5. Decide which instrument you will practise with for two weeks, and record the justification in one sentence based on the calculation.

Check yourself

Common questions

Is a foreign ETF better than buying US stocks directly?

It is sometimes operationally more convenient for someone settling taxes in Poland, but it is not a rule. What counts is the fund's total cost, the spread on the exchange, the quality of index tracking, and your broker's offer. Compare concrete tickers, not advertising slogans.

Why read ESPI announcements?

ESPI and EBI are official channels for reporting company events. Before a report is published the market is sometimes thin, and after it the session can open with a gap. The decision to stay in a position through a publication is part of the plan, not an accident.

When should I choose a CFD instead of the paper?

When you need short exposure or an instrument unavailable in a brokerage account, while accepting the cost of holding overnight, the absence of ownership, and the counterparty's rules. It is not a cheaper choice in itself.

Why calculate round-trip cost rather than just the commission?

Because the commission is one item out of several, and often not the largest. In the example from the lesson, currency spread raised the cost of a foreign transaction from about 10 PLN to about 43 PLN (illustrative numbers) — with an identical commission and identical market spread. That number decides whether a strategy earns after costs.