How To Trade in Canada

Published by FrankNez Team.

The Canadian stock market may not be the most exciting in the world and yet, trading in Canada does offer some excellent opportunities to both investors and speculators for those who can identify the best Canadian stocks. Buying stocks in Canada is relatively straightforward and there is now a good solid choice of online brokers and discount brokers making it cheaper than ever to start trading stocks today.

The Canadian stock market at a glance

Dating back to 1852, the Toronto Stock Exchange (TSX) is currently the 11th largest stock market in the world.

There are some 1,700 listed issuers adding up to a combined market capitalization of CAD $3,059,755,023,680.

The Canadian exchange is only 6% of the size of the US ($2 trillion CAD vs $27 trillion USD) exchange so cannot really compete in terms of size, opportunity or lucratively.

Still, recent decades have indicated that the TSX does perhaps offer a stability that has at times been worryingly lacking in Wall Street, the City of London and Shanghai.

How to trade in Canada with a broker

In order to trade and buy stocks in Canada, you do need to use a broker.

The TSX does not deal directly with investors and as such, a registered broker is needed to act as a middleman, executing instructions on an investor’s behalf.

The first step is to identify a suitable broker and sign up for an account.

You will need to have ID documents and tax information to hand in order to comply with KYC requirements.

After funding the account with an initial deposit, we are free to begin trading.

Note that online brokers seldom offer much in the way of help or advice so deciding what to invest in and what strategies to use is down to individual users.

However, before making a trade it is definitely worth spending some time to learn how it works and to familiarize oneself with the various trading tools offered inside the brokers site or app.

Top Canadian Brokers – (Including Online Brokers and Discount Brokers)

Let’s look at some of the leading and best Canadian online brokers.

●     Questrade

Questrade is one of a handful of Canadian brokers who also offers access to the US exchange making them a great option for those want to dabble in the much bigger, US stock exchange.

Trading fees are extremely competitive starting at $0.01 per share (although with a $4.95 minimum).

●     QTrade Direct

Qtrade Direct offers a great client experience and a user-friendly interface.

Trading fees are a little higher than Questrade coming in at $8.95 – of course, this is fine on large trades but does deter those wishing to trade smaller volumes.

●     Wealth Simple

WealthSimple is a great platform for beginner investors on account of its tutorials, and robo-advisor.  Interestingly, Wealth Simple also offers halal, eco-friendly and social responsible investment options!

Trading fees begin at $0.00 although WealthSimple does charge a currency conversion of 1.5% for any US based trades.

Trading in Canada VS USA

Culturally and politically, the USA and Canada are quite similar.

In fact, Canada is often (perhaps disparagingly) regarded as the US’s nicer but simpler cousin. 

However, when it comes to financial policy, Canada is notably more regulated and does not quite condone the gun-ho, liberatarian, low-regulation attitude to financial conduct that the US has become (perhaps unfairly) famous for.

Indeed, the WEF even complimented the Canadian banking system as being the “soundest in the world”.

The US stock exchange is far more diversified than its Canadian counterpart.

As we said in the intro, the Canadian stock exchange is largely dominated by 3 sectors – banking, energy and industry – whereas the US stock exchange offers the opportunity to invest in some world-famous tech, healthcare and military supply companies.

Related: How to Invest in the Stock Market for Beginners

Conclusion on buying stocks in Canada

So, there we have it.

While the Canadian stock market is by no means the biggest, it still offers enough to engage most investors.

Buying stocks in Canada is simple, and by picking the best Canadian stocks, investors can expect a satisfactory return.

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