Day trading, the fast-paced world of buying and selling securities within the same trading day, has become increasingly popular in Canada. Fueled by the rise of discount brokers and commission-free trading apps, more and more Canadians are attempting to capitalize on short-term market movements.
However, navigating the landscape of day trading platforms can be daunting, especially for beginners. This article explores the five best day trading platforms in Canada for both novice and experienced traders, along with crucial considerations like fees, tools, and regulations.
Top Picks for Canadian Day Traders
1. Questrade: A Feature-Rich Platform for Active Traders
Questrade reigns supreme for Canadian day traders seeking a comprehensive platform with exceptional features and competitive pricing. Established in 1999, Questrade boasts a user base exceeding hundreds of thousands, likely due to its diverse investment offerings, robust research tools, and tiered fee structure.
Questrade caters to various trading styles with four distinct platforms:
- Questrade Trading: A web-based platform ideal for research and basic trading.
- QuestMobile: A revamped mobile app designed for seamless day trading on the go.
- Questrade Edge: A professional platform for advanced order types, options trading, and extensive customization.
- Questrade Global: A platform dedicated to forex and CFD trading.
Day traders particularly benefit from Questrade’s access to advanced real-time market data for the U.S. and Canada. Additionally, they can create personalized watchlists, alerts, and leverage margin for amplified returns (with amplified risk).
Pricing:
- Stocks & ETFs: $4.95 per trade (minimum) and $9.95 (maximum).
- Options: $4.95 + $0.75 per contract.
- ETFs (purchase): Free
- Real-time market data: Starts at $89.95 CAD/USD per month.
Promotion: Get $50 in free trades when you fund your account with a minimum of $1,000.
2. Qtrade: Customer-Centric Platform with Competitive Fees
If exceptional customer service is a priority, look no further than Qtrade. This user-friendly platform caters to both experienced and novice traders, offering a wide range of tradable assets, including stocks, options, mutual funds, ETFs, and bonds. Qtrade is accessible through a web interface and mobile apps, providing traders with on-the-go convenience.
Here’s a glimpse into Qtrade’s arsenal of tools:
- Stock screeners
- Watchlists and alerts
- Portfolio building tools
- Fundamental research
- Real-time quotes
- Technical research (and more)
Active traders who surpass 150 trades per quarter or hold an account balance exceeding $500,000 qualify for reduced trading commissions. Additionally, young investors between 18 and 30 years old receive a further discount on standard pricing.
Pricing:
- Active Trader: Stocks – $6.95/trade, Options – $6.95 + $1.25/contract, ETFs (most free, some $6.95)
- Regular Pricing: Stocks – $8.75/trade, Options – $8.75 + $1.25/contract, ETFs (most free, some $8.75)
Promotion: Get a $50 bonus when you sign up and deposit at least $1,000. Earn up to an additional $150 for higher deposits.
3. Wealthsimple Trade: The Champion for Free Commission Day Trading
For cost-conscious Canadian day traders, Wealthsimple Trade emerges as a champion. This free trading platform, owned by the popular robo-advisor Wealthsimple, allows users to buy and sell stocks and ETFs commission-free. This makes it an excellent choice for beginners who want to experiment with day trading without incurring hefty fees.
Wealthsimple Trade prioritizes a user-friendly interface accessible via its website and mobile apps. However, a crucial caveat for day trading is the lack of real-time market data on the free account. This data is vital for making informed, split-second decisions within the fast-paced day trading environment.
To access real-time market data, USD accounts, and instant deposits, users can upgrade to Wealthsimple Trade Plus for a $10 monthly fee.
Pricing:
- Trade Account: Free (with 15-minute delayed quotes)
- Trade Plus: $10/month (with real-time market data)
Promotion: New Wealthsimple Trade clients can enjoy:
- Free stock and ETF trading
4. CIBC Investor’s Edge: A Stepping Stone for Beginner Day Traders
CIBC Investor’s Edge caters to beginner day traders seeking a platform backed by a reputable financial institution. This bank-owned discount broker allows users to trade stocks, options, ETFs, mutual funds, and precious metals.
CIBC Investor’s Edge offers a web-based platform and mobile app, equipped with tools to facilitate informed trading decisions:
- Stock, ETF, and mutual fund screeners
- Technical analysis and charting functionalities
- Research reports and fundamental analysis
- Watchlists, alerts, and advanced order types
Active traders who execute over 150 trades per quarter benefit from reduced commissions. Students also receive discounted trading fees, making CIBC Investor’s Edge an attractive option for cost-conscious beginners. Notably, the platform supports up to eight currencies, enabling users to avoid foreign exchange conversion fees when depositing funds.
Pricing:
- Active Trader: Stocks & ETFs – $4.95/trade, Options – $4.95 + $1.25/contract
- Regular Pricing: Stocks & ETFs – $6.95/trade, Options – $6.95 + $1.25/contract
5. Interactive Brokers Canada: A Powerhouse for Advanced Day Traders
Interactive Brokers Canada (IBKR) caters to experienced day traders who demand access to a global marketplace. This sophisticated platform enables users to trade a vast array of assets, including stocks, options, futures, currencies, warrants, and more.
IBKR boasts a comprehensive suite of trading tools and functionalities:
- Over 100 order types
- Access to algorithms and backtesting capabilities
- Real-time market data
- Technical analysis tools
- Low trading fees and financing costs
- Options writing tools (and more)
Interactive Brokers offers tiered and fixed commission structures. For stock trades under 300,000 shares per month, users can choose between:
- Tiered: 0.008 CAD/share or 0.006 USD/share (minimum $1 CAD/$0.08 USD per order or maximum 0.50% of trade value)
- Fixed: $0.01 CAD/share or $0.08 USD/share (minimum $1 CAD/$0.80 USD per order or maximum 0.50% of trade value)
The platform’s support for 23 currencies allows users to avoid foreign exchange fees when trading internationally.
Day Trading in Canada: Essential Considerations
Before diving into the world of day trading, understanding the following factors is crucial:
- Day Trading Explained: Day trading involves buying and selling securities within a single trading day, capitalizing on short-term price movements. Day traders frequently execute multiple trades throughout the day.
- How to Start Day Trading in Canada: To embark on your day trading journey, you’ll need to open a self-directed brokerage account. Consider the following factors when selecting a platform:
- Investment Offerings: Ensure the platform supports your preferred tradable assets (stocks, options, forex, etc.).
- Trading Fees: Day trading can incur significant fees due to frequent trades. Choose a platform with competitive fees to maximize your profits.
- Order Types: Experienced day traders rely on diverse order types to execute their strategies. Verify if the platform offers the necessary order types.
- Real-Time Data: Real-time market data is vital for informed day trading decisions. Ensure the platform provides this service.
- Margin: Margin allows you to borrow funds from the broker to amplify your gains (and potential losses). Consider if margin trading aligns with your risk tolerance.
- Trading Tools: Assess the platform’s technical and fundamental analysis tools to support your trading decisions.
- Customer Support: Reliable customer support is crucial in case of technical difficulties or troubleshooting.
- Day Trading Taxes in Canada: Generally, capital gains from selling securities at a profit are taxed at a preferential 50% inclusion rate. However, the Canada Revenue Agency (CRA) may classify frequent traders as professional day traders, subjecting them to full income tax on profits.
- Day Trading Rules in Canada: Unlike the U.S. with its Pattern Day Trader rule requiring a minimum of $25,000 USD, Canada lacks specific day trading regulations. However, individual brokerages may enforce their own rules. Additionally, avoid day trading within Tax-Free Savings Accounts (TFSAs) to avoid potential reclassification of your activities as business income by the CRA.
- Is Day Trading Legal in Canada?: Yes, day trading is perfectly legal in Canada. Maintain meticulous records of your trading activities, profits, and losses for potential CRA audits. You must be of legal age in your province (18 or 19 years old depending on location) to open a day trading account.
- Is Day Trading Worth It? Day trading is a high-risk endeavor, and it’s essential to acknowledge the potential downsides before diving in. For most individuals, a long-term investment strategy is likely more suitable. The vast majority of day traders lose money due to the inherent volatility of short-term market movements, emotional decision-making, and the significant costs associated with frequent trading.