When it comes to Canadian online brokers or trading platforms for active Canadian day traders it’s important to look at the “elite tier pricing” offers that each brokerage offers as opposed to the normal mainstream pricing. Depending on the trading platform, you are usually considered a day trader if you make more than 150 trades per quarter.
FREE buying and selling of 100+ ETFs
Up to $2,000 Cash Back
Best Canadian Broker
Free BUY of ETFs (full trading prices apply to ETF sales)
$50 in Free Trades
Free to Buy And Sell
$10 Signup Bonus
Best Mobile Trading
$0.01 per share with a $1 minimum
Best For International Trading
To be honest, I think the vast majority of Canadian investors would be much better off not being considered active traders, as the data on actively managing a portfolio through market timing and day trading is pretty rough.
That said, if you’re going to be moving in and out of investment positions quickly, fees and trading platform costs matter significantly more than they would for an index investor or someone looking to buy Canadian dividend stocks to “buy and hold forever”.
Trading Fees, Options Trading, and Low Margin Rates
Obviously if you’re making upwards of 50+ trades per month, any advantage in per-trade costs get magnified. If you’re more of a “macro trader” (looking to make moves based on large scale economic happenings vs the traditional “stock picker” who is trying to lock in on advantages for specific companies) then you may not make quite as many trades of individual stocks, and the free ETF buys and sells from Qtrade become a lot more attractive.
If you’re a professional day trader (meaning that you rely on buying and selling assets such as stocks, commodities, currencies, and options to put food on your table) then the three main areas that you want to compare are the trading fees for each transaction, the options trading fees, and the margin rates you will be charged when you borrow money from the broker to buy stocks.
When it comes to options and margin rates, it is tough to beat “IBKR” or Interactive Brokers. Those low costs come with a ton of trade offs though. Check out our Interactive Brokers Canada Review for more information on why we just can’t recommend them even though they have some significant cost advantages.
While a lot of day trading courses like to boast about the millions their clients have made, and all the great stock picks that they have forecasted in the past, professional day traders with any experience know just how important cutting costs can be. Beating the market is very difficult – but beating the market when you’re paying much much higher fees than many of your competitors is nearly impossible over the long term.
Best Platform in Canada for Day Traders: Customer Service and User Experience
Many day traders don’t feel that they need to give customer service much weight when it comes to choosing the best trading platform for their personal needs. The fact is that no one ever needs customer service – until they do. Since early 2020, we have been bombarded with comments and emails that usually go something like:
“I went out for lunch and when I came home my broker had made [fill in error here] and it cost me thousands of dollars. When I tried to get someone on the phone or live chat, I had to wait for three hours, and then the end of the trading day cut me off! It’s absolutely ridiculous, I will never use [fill in broker here] again!”
Don’t confuse having a solid knowledge base and experience trading equities with the idea that you’ll never need help when it comes to navigating a specific trading platform. This focus on platform reliability and timely reliable customer feedback is why we now rate Qtrade at the top of our online brokers list. If you read our Qtrade Review you’ll see we’re not the only ones who have noticed the consistent excellence of their customer support team.
That said, if you’re looking for the absolute lowest fees, it might be worth checking out Wealthsimple Trade, IBKR, or Questrade as well. Just don’t say we didn’t warn you when you try to get the live online chat to work and you have to wait 3+ hours to get an obvious error corrected
What Is Day Trading?
The textbook definition of “day trading” is to buy and sell a stock/bond/ETF on the same day. Many successful day traders will enter and exit into the same “trade” several times throughout a single day if the security being traded is volatile enough.
Essentially (as far as most trading platforms are concerned) day trading is any “active trader” that makes more than 50 trades per month. Some brokers even make allowances for extremely active or “hyperactive” day traders – giving them even lower prices since they are effectively buying the brokers’ services in bulk.
The goal for most day traders is to quickly “buy low and sell high” – thus profiting from quick movements in the stock or bond markets. While this sounds simple, it requires a lot of skill to do efficiently.
Day Trading in Canada for Beginners
The term “day trader” can mean a lot of different things depending on the context it is used. Some people will call anyone who isn’t a “couch potato index investor” a day trader (making it more or less synonymous with the term “active trader”.
Other industry professionals might say that a day trader is someone who makes their daily living from buying and selling assets (usually stocks). Most trading platforms offer elite pricing options for “high volume” traders who make more than 150 trades per quarter – or 50 trades per month – so perhaps that’s the most precise description.
In any case, day trading is usually used to describe someone who feels they can outperform the market average, and who has decided that they can earn money by determining where a market such as the stock market or Bitcoin market will go ahead of time. It might sound simple to just login to your trading platform and buy-low-sell-high your way to quick riches – but statistically speaking you are much more likely to lose money than to gain money by going this route.
The few people that I’ve seen have any sort of sustained success through day trading are introverts who simply love reading about various companies. They are the types that enjoy using a Saturday afternoon to page through the last few years of a company’s prospectus, and who usually have some sort of background in reading financial statements and balance sheets.
Successful day traders are usually quite patient as well, since they understand that it costs valuable capital to constantly be moving in and out of positions.
Logistically, day trading is pretty simple. Setup an account on a trading platform (most will use a basic margin account that offers no tax advantages, but allows people to borrow money from brokers in order to take advantage of an opportunity they want to pursue) and simply pick your exchange. Perhaps you want to trade shares of Canadian companies on the Toronto Stock Exchange? Or maybe trading options is more to your liking?
Just remember that while day trading is easy for beginners to set up, it’s much more difficult to be successful at – no matter what those Facebook ads tell you!
Day Trading: Charts And Technical Analysis
Unlike long term investors who look at fundamental analysis in order to make investment decisions (using metrics such as the company’s earnings, debt-to-equity ratios, dividend yields, payout ratios, etc) day traders tend to focus on predicting short-term movements in asset value.
While I’m not a fan of technical analysis, the experts claim that my studying charts and delving into the “psychology of the markets” day traders can more often than not predict an asset’s movements in the short term.
By looking at minute pieces of data, the goal is to predict volatility and momentum within a stock or ETF. This data is often charted in a specific manner and talked about in the form of patterns.
You will often hear technical analysts use terms such as “golden triangle”, “head and shoulders”, or “cup and handle”. The more volatility there is within a defined price band, the more you will see commentators refer to a situation as a “stock pickers market”.
Should I Day Trade In My RRSP or TFSA? What about TFSA Taxes?
The vast majority of Canadians should definitely not use their RRSP or TFSA for day trading purposes. It’s just such a longshot that you will beat the market, that it is very hard to justify using your valuable tax shelters for such high-risk endeavors.
Additionally, the Canadian Revenue Agency (CRA) has come out and said that TFSAs are for retirement savings – not for generating day-to-day tax-free income. As a consequence of that ruling, Canada’s tax man has stated that day traders can be taxed on the gains made within the TFSA if they are moving in and out of positions relatively quickly. This has led to some large unexpected tax hits for Canadian day traders who thought they were trading under the tax sheltered TFSA umbrella. Once that TFSA contribution room is gone – it’s gone forever – so it’s a potentially very costly mistake.
Overall, I would recommend against day trading within your TFSA or RRSP!
Best Canadian Day Trading Stocks 2022
I should point out that this is not a “Best Canadian Stocks List” – but instead is a ranking of stocks on the Toronto Stock Exchange that have the two qualities that day traders look for: Momentum and Volatility.
If you could accurately predict the movement of these best day trading stocks, you could conceivably have made substantial profits.
|4||ATH||Athabasca Oil Corp|
|7||CPG||Crescent Point Energy Group|
|9||GHG||Global Hemp Group|
|10||TBP||Tetra Bio Pharma|
You will no doubt notice that this list is heavy with companies from the energy sector. This is fairly logical when you consider that Canada’s stock market is home to many of the top oil and gas producers in the world – and that energy is a notoriously volatile market. When you consider that these companies’ revenues have went up and down by several multiples over the last few years, you can see why the volatility exists.
Day Trading FAQ
Day Trading in Canada – Final Thoughts
If you value consistent innovation, free etfs, great customer service, and excellent access to investor information, then Qtrade is the way to go.
No matter which trading platform you ultimately decide is best for you, make sure to leverage the size of your account and the relatively large trading commissions that you’ll be paying to maximize value. If you have an account size over $500,000 and/or you’re making more than 50 trades per month, you should be able to garner a substantial discount from any of Canada’s top trading platforms.
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