Online trading is the act of buying and selling financial securities through a digital platform like an online trading broker, connected to an exchange or market. Online trading offers Canadians a powerful way to manage investments, access global markets, get tax-advantages using a TFSA or RRSP, and build wealth independently, without the need of a traditional financial advisor or a bank. Choosing the right online trading broker is crucial, because each broker has different fees, offers different investment products, trading tools, and not all of them are regulated in Canada by the Investment Industry Regulatory Organization of Canada (IIROC).
Furthermore, your personal preferences, experience level, trading style, investment goals and risk-tolerance matter a lot too, as they highly influence which broker is the right choice for you.
We’ll walk you through the best Canadian brokers, help you choose wisely, and give you the investing know-how to reach your financial goals. Let us break down our top 5 broker recommendations and how they compare across the above mentioned key factors:
Broker name | Fees | Platforms | Account Types | Key Differentiator |
---|---|---|---|---|
1. Interactive Brokers (IBKR) | Low commissions and margin rates | Advanced desktop, web, mobile features | TFSA, RRSP, margin | Cost-effective, powerful tools, global market |
2. Questrade | Free ETF purchases, reasonable fees | user-friendly interface, learning materials | TFSA, RRSP, margin | Great for beginners, Canadian focus |
3. Wealthsimple Trade | Zero commissions, zero fees on selected FX | Simple desktop, mobile, and web app | TFSA, RRSP | Easiest to use, good for young investors |
4. CIBC Investor’s Edge | Tiered pricing, bank-backed | Solid for research and analysis | TFSA, RRSP, margin | Seamless and convenient for existing CIBC clients |
5. TD Direct Investing | Varied fees, strong research tools | Web, mobile, Thinkorswim | TFSA, RRSP, margin | Research & learning, diverse investment options |
Interactive Brokers stands out for cost-conscious investors and traders who seek powerful trading resources. The well-structured pricing, low fees, and access to international markets make the broker a great choice for traders who either frequently trade or have deeper knowledge and experience.
Questrade is a suitable broker for most Canadian traders overall. The broker provides a great balance of affordability, user-friendliness, and research resources. Questrade is a good choice for beginners and even seasoned traders.
Wealthsimple is known for its simplicity and affordability, CIBC Investor’s Edge is a good choice if you are an existing CIBC client, and TD Direct Investing for self-directed investing and in-depth research.
1. Interactive Brokers
Interactive Brokers (IBKR) is a global brokerage platform offering Canadian investors low-cost trading, a vast selection of assets, and powerful tools for in-depth analysis.
Their tiered commission structure means the more you trade, the less you pay per trade. Plus, their excellent FX rates mean you save significantly when buying US-listed stocks compared to competitors. IBKR lets you invest in Canadian and global markets, including stocks, ETFs, options, bonds, and more. It’s known for its free research tools, advanced charting features, and complex order types suitable for experienced traders. The platform is secure, regulated by IIROC and other major financial bodies like CDIC, OSFI, and FCAC to ensure security and reliable trading experience of its users.
While IBKR’s platform can be complex for beginners, it’s ideal for these types of investors:
- Active traders looking to maximize their returns through low fees.
- Investors seeking access to global markets and a wider range of assets.
- Those with a DIY mindset willing to learn a powerful platform to grow their trading skills.
For beginners, especially if you don’t trade full time, the platform might feel complex at first. However, IBKR generally excels for traders looking for diverse investment choice, robust trading functionality, and cost-efficiency.
Read our full Interactive Brokers Canada review to learn more about its features, pros and cons.
Click here to visit the official IBKR Canada website
2. Questrade
Questrade is a leading online brokerage in Canada. The platform is known for its user-friendly interface, educational resources, and reasonable fees (0.25% with a balance of $1000-$99000). Questrade makes a popular choice for beginners because the platform holds significant market share in Canada. When you open a portfolio, there are no account fees, and no deposit & withdrawal fees.
Experienced investors also use Questrade because it is well rounded, it is easy to use and navigate, making the online trading experience seamless and consumes less time.
The strength of Questrade lies on its great balance of features and affordability. You can purchase ETFs for free. Also, it offers TFSAs, RRSPs, and margin accounts. Your investments are secured because it is regulated by IIROC.
The tool is focused on being straightforward. If you are a trader looking for a more advanced analysis, you might find the tools and resources overly simple. However, Questrade does well in terms of ease-of-use, educational resources, and a wide range of investment types to trade.
Lastly, take the currency exchange fee of 1.5% into account, including ECN fees when removing and adding liquidities on some U.S. and Canadian securities (e.g. for IEX, adding/removing liquidity costs $0.0012/share). Read our full Questrade review to learn more about its features, pros and cons.
Click here to visit the official Questrade website
3. Wealthsimple Trade
Wealthsimple Trade is a Canadian online brokerage platform popular for its commission-free trading. Its mobile app is also intuitive and its platform overall is recognized for its simple interface and user experience.
The benefits of Wealthsimple Trade includes fractional share trading (purchases of even small portions of stocks). That is why the broker is a popular choice for beginner investors and traders who seek a more streamlined trading experience.
However, the limited investment selection and simple analysis tools might underwhelm traders with more advanced online trading strategies. Overall, Wealthsimple Trade focuses on affordability and it appeals highly to beginners.
4. CIBC Investor’s Edge
CIBC Investor’s Edge is an online brokerage platform of Canadian Imperial Bank of Commerce. The broker provides convenient investing solutions, especially for current clients of CIBC. The platform allows traders to manage their traditional banking services and their trading portfolio within a single institution.
Investor’s Edge is an advantage to CIBC customers because it integrates a wide range of financial services. If you hold large balances on their accounts, CIBC might offer discounts as well.
However, certain fees on Investor’s Edge might be higher than competitors. Overall, CIBC Investor’s Edge is ideal for investors who have existing CIBC bank accounts, as well as traders who want to integrate multiple financial services into one.
5. TD Direct Investing
TD Direct Investing TD Bank’s online brokerage platform. It is known for its comprehensive features, extensive research resources, and educational materials.
The broker works well for Canadian traders looking for in-depth market analysis, news, and learning materials to support their trading decisions. Furthermore, the broker is a go-to choice for self-directed investors because the website provides direct investing education, indexes, webinars, and articles.
Another benefit of TD Direct Investing is its exclusive research reports and it’s great for Canadian traders because they provide real-time market data and quotes on Canadian markets. However, the fee structure can be less competitive compared to other brokers, especially for casual traders. Overall, TD Direct Investing stands out in their learning materials and access to more in-depth market data.
What to consider when choosing a trading broker in Canada?
When choosing a trading broker in Canada, consider factors like fees, investment products, account types, user interface, tools available, customer support, and security of your account. Brokers often charge fees for every transaction you make, so understanding fee structures is crucial. Also, several key factors will impact the overall trading success beyond simply choosing brokers with the lowest commissions.
Fees
Fees are the amount the broker charges for buying and selling investments on their platforms. Focus on finding a broker with a transparent and simple fee structure. Make sure they don’t have hidden charges and look for a per-trade commission fee that fits your budget.
While per trade commissions might be suitable for occasional trades, frequent traders can benefit from tiered fee structures or flat monthly subscriptions. These pricing models offer significant cost savings if you trade in high volume. Although, be mindful of additional fees for features like real-time data or margin borrowing. Also research a broker’s trade commissions, inactivity fees, hidden fees, and foreign exchange fees.
Investment products
Investment products are financial instruments designed to help traders grow their wealth. They are based on an underlying security/group of securities purchased, expecting the investments to grow in the future.
An ideal broker will offer different securities. For example, ETFs are ideal for diversification with a single purchase. Although, look beyond basic stocks and ETFs. Complex strategies like options contracts and margin trading are alternatives for experienced traders. Ensure the broker of choice offers the investment products you plan on using.
Account types
Different accounts offer tax advantages or specific features. In Canada, the common types available are TFSAs, RRSPs, margin accounts, and non-registered accounts.
The availability of the account types mentioned is crucial depending on your investment strategies and goals.
User Interface and Tools
The trading platform is the place where you buy and sell securities. Especially for beginners, user-friendly platforms and tools are needed because they help you analyze the market and improve your workflow when trading online. Choose a platform with layouts you find easy to navigate. Look for price charts, news feeds, and educational resources to get you started as well.
If you want a more in-depth analysis, choose the online trading platforms with advanced charting tools. The tools should feature technical indicators and customizable layouts. Settings for placing advanced order types can also be important for specific trading strategies.
Customer Service
Customer service refers to the assistance and advice the trading platform provides to its traders. Prioritize brokers with reliable customer support because it is the first point of contact when issues occur or when you need answers with regards to fees, executing trades, and navigating online trading tools.
An ideal broker has multiple contact methods to get assistance when needed. Responsive and knowledgeable customer service makes a big difference. Check reviews online to determine the quality of a broker’s customer service.
Account Security
Account security is the measures taken to protect online accounts from unauthorized access, data breach, and attacks. Money and personal information stored on the platform needs to be safe from being compromised.
IIROC should regulate the broker of choice. Also, a trusted broker must add account protection measures (e.g. encryption, 2FA, and coverage through the Canadian Investor Protection Fund/CIPF).
How to Choose the Right Trading Broker for You
Finding the right broker that fits your needs and goals drastically improves your potential gains, especially in the long term. Researching for brokers can be overwhelming, especially when there are lots of options. Here is how to find the right platform based on your trading style, risk tolerance, and investment goals.
What is the best online trading broker for Canadian active traders?
Active traders buy and sell their financial instruments often. Since active traders transact more, it is vital you look for platforms with lowest possible costs, quick trading executions, and advanced technical tools. IBKR is great for active traders because its fee structures favors their high trading volumes.
Prioritize platforms with access to real-time market data. Frequent current news is essential to spot opportunities and make quick trading decisions. Also, it is crucial that the platform you opt in for provides extensive charting capabilities and multiple technical indicators.
What is the best online trading broker for beginner Canadian traders?
Beginner traders should focus on a platform with easy navigation. A good example of this is Questrade. The online trading platform has a simple interface, layout, and menu options. Because of this, even beginners will feel less overwhelmed. The broker you should be looking for should also offer beginner-friendly educational materials so you constantly learn as you trade.
When researching for fees, choose brokers with reasonably low commission rates. Some brokers, like Wealthismple, even have zero commissions for self-directed investing. Just keep in mind that commissions on stocks, ETFs, and options from other brokers might be tiered. So pick an online trading platform with fees favorable for starter investors.
Besides commissions, check for administrative fees, withdrawal fees, and/or currency conversion fees (trading in a market with different currency). Being aware of the charges allows you to strategically set up realistic expectations on your profit, especially when starting with smaller amounts.
What is the best online trading broker for Canadian long-term investors?
A long-term investor targets the potential growth of a company for the next few years, even decades. The best online trading broker for long-term investors in Canada should have secured database, reliable platform, and low recurring fees.
Since long-term investors rarely buy stocks or ETFs, focus less on per-trade commissions. Instead, check for brokers with less or zero recurring fees (e.g. MERs, annual fees, inactivity fees). Management expense ratio, for example, eventually adds up over time, even if it only costs you a small percentage per year.
Long-term traders often diversify their portfolios because it mitigates risks. So ensure your broker of choice offers multiple stocks and ETFs. The platform should offer access to company news and charts, especially for fundamental analysis. The data collected helps in making well-informed decisions.
IBKR and Questrade are ideal platforms for long-term traders. Both brokers have low recurring fees, and if criterias are met, you might be eligible for zero inactivity, administration, and annual fees. Furthermore, IBKR features automated risk controls, enhancing security of your holdings. Also, you can access 150 markets, both in Canada and globally.
What is the best online trading broker for Canadian veteran traders?
Seasoned and more experienced traders require resources for deep understanding of the markets and latest news because they employ well-developed trading strategies. Timing and precision on trading execution is paramount. So veteran traders should seek platforms with customizable layouts, more accurate charting, technical indicators, and the ability to place complex order types with fast and reliable trading execution.
Additionally, low-cost pricing remains important. Tiered fee structures (like on IBKR) might become more appealing based on trading volume because the fee is reduced as you trade more frequently or with larger monthly volumes.
Since experienced traders likely have more tolerance to online trading risks, they venture into options, futures, and margin trading. Reviewing a broker’s performance on these classes of assets is required. Consider interest rates, additional charges, as well as regulations, requirements, and terms.
For more experienced Canadian traders, a popular broker of choice is IBKR. That is because the trading platform only charges margin loan rates from 5.372% (BM + 0.5%) to 6.372% (BM + 1.5%). It supports complex orders (stop-loss, limit orders) and a huge range of technical indicators as well.
What is Online Trading?
Online trading is the buying and selling of financial assets (e.g. stocks/equities, bonds, or exchange-traded funds) on brokers using the internet. It allows traders to take control of their holdings, research prospects, place trades, and monitor the performance of their portfolio in a single platform, whenever and wherever they want.
How to start online trading?
To start trading online, you need to open an account with a broker of choice and deposit funds. You can research about stocks, ETFs, or other securities on the platform. When you are ready to buy, you will place an order and specify what you intend to purchase, including the quantity, and the price you are willing to pay for it. To execute the trade, the broker matches your order with a seller. Once completed, you can monitor your investments, buy more or sell what you have.
What are the types of online trading?
Understanding the types of online trading assets is key to building a trading strategy that matches your goals. Here are some of the most common types of assets being traded online:
- Stocks: also called equity, are shares of ownership in a company. Owning stocks gives you potential returns through price appreciation and/or dividends.
- ETFs (Exchange-traded funds): collection of different types of assets traded like a single stock. ETFs instantly spread your investment and can be focused on specific sectors, themes, or geographic regions.
- Options: contracts that grant the right, but not ownership, to buy or sell an underlying asset at a predetermined price (strike price) before the expiration date. Options are more complex and can carry greater risk/reward.
- Bonds: loans made to companies, governments, or other issuers. Bonds generally pay regular interest payments and return your principal investment at maturity date, a specific date in the future.
- Mutual funds: an investment vehicle that pools investments from investors and a professional fund manager uses that money to buy investments strategically. Mutual funds provide diversification and convenience, but often charge management fees.
What are the benefits of Online Trading in Canada?
The benefits of online trading are lower trading costs, more convenience, and more financial independence than traditional brokers offer. Specifically in Canada, the country has powerful tax-advantaged accounts like TFSA and RRSP. The regulations boast a strong financial system, encouraging more traders because of its safety and stability. Let us explore some of the top advantages of trading online in Canada:
- Lower Costs: online brokers offer significantly lower commissions, often with commission-free stock and ETF trades. This is more affordable compared to traditional full-service brokers in Canada (commission fees around CAD $10-CAD $30/trade).
- Convenience: Canada boasts a high internet penetration rate, with over 94% of households having access according to a 2023 study by Canadian Internet Registration Authority (CIRA). The widespread internet access makes online trading convenient. You can trade from anywhere with wifi. The reliable internet speed allows you to react to market movements or manage your portfolio on your own schedule.
- Control: Unlike traditional brokers, online trading allows you to make investment decisions independently. You can conduct your own research, analysis, and trade directly through online brokerage platforms.
- Educational Resources: Most brokers provide educational resources for well-informed decision-making when you trade. The materials can come in many forms (e.g. articles, webinars, podcasts), covering topics like basic trading principles, technical analysis, fundamental analysis, diversification, and understanding different assets and strategies. For instance, Questrade, a widely used broker by Canadian traders, has a comprehensive learning center covering platform basics, investment concepts, and knowledge about stock market.
- Diverse Offerings: Online brokers in Canada often provide access to investment products including ETFs, Options, Bonds, Mutual Funds, and stocks. Additionally, you commonly find brokers that let you access international markets for trading. The wide range of options to trade in diversifies your portfolio further.
What are the risks of online trading?
It is important to know the risks when trading online. Being aware of the risks helps you make data-driven decisions, mitigating the risks. Here are the risks you need to consider to set you up with realistic expectations:
- Volatility: refers to stock prices and the fluctuation of the market. Sometimes significantly, investments can lose value quickly, especially in the short term. It is essential to be prepared for this volatility with a long-term mindset.
- Lack of Advice: Online trading is self directed. You will not receive personalized advice like you would with a traditional financial advisor. It is vital to do your own thorough research and analysis before you make a trading decision. Base it on your risk tolerance and financial goals.
- Emotional Trading: Cognitive biases and emotional triggers like fear, impatience, and frustration leads to impulsive trading decisions, which can result in losses. It is important to discipline yourself, build a solid strategy, and base your decisions on data and analysis to avoid emotional reactions to unexpected market movements.
- Overconfidence: Even experienced traders can be overconfident. Being overconfident, especially if you predict assumptions based on previous success will lead you to excessive risks. It is important to remain humble, continuously learn, and treat future trading decisions as a new case. Always remember that the market moves unpredictably.
What are some profitable online trading strategies?
An online trading strategy is a plan of action for buying and selling of financial instruments on the internet. To improve potential success, a solid strategy should be structured, systematic, and data driven.
However, the right way to trade online differs from each trader. Here are the examples of basic online trading strategies to help you decide which strategy fits your risk profile and investment goals:
- Buy-and-Hold: involves purchasing assets and holding them for an extended time, hoping for a potential compounding return. The strategy is long term, often years or even decades. It is less risky, making it beginner-friendly.
- Day Trading: day traders buy and sell securities within the same trading day. The strategy aims to take advantage of short-term fluctuations, often on volatile markets. Day trading is highly risky and requires significant experience, commitment, and skills in technical analysis.
- Swing Trading: involves holding investments for a few days or weeks. The strategy falls between buy-and-hold and day trading, and profits from intermediate price swings.
What much tax do I have to pay in Canada for trading profits?
The amount of tax you pay on trading profits in Canada depends on what type of account you are using and whether you are considered an investor or a trader. For traders, the profits are considered business income and are taxed at the full marginal tax rate. Meanwhile, the profits are considered capital gains for investors who seldom trade, where 50% the value of the profit is added to the regular income.
It is important for a trader to understand taxation. Canada has several types of accounts with different tax implications. Being informed supports your approach to buying and selling, maximizing your returns. Here is a simple breakdown:
- TFSA (Tax-free savings account): investment growth and withdrawals within a TFSA are tax-free. TFSA excels at maximizing returns.
- RRSP (Registered retirement savings plan): Contributions are tax-deductible, reducing your taxable income in the year you contribute. However, withdrawals are taxed as income, typically when you take money out in retirement.
- Non-Registered Accounts: Capital gains, profits you gain from selling investments are capital gains are taxed the same year it was realized (the sale occurred). 50% of that capital gain is considered an income tax regardless of how long you held the asset. It is crucial to track your transaction on taxable accounts for accurate reporting of taxes.
What are some popular order types in online trading?
Order types in online trading are the different procedures on making a trade. Order types specify instructions like when to buy/sell stocks or when to enter/exit a trade based on conditions you set.
Online brokers allow you to execute trades in multiple ways. Different order types have different levels of precision, strategy, and risk management. Here are the order types you should know:
- Market Order: buying and selling of a security immediately at the best available price. Market orders prioritize speed of execution, and you might not get the exact price you hoped for.
- Limit Order: buying and selling of a security only at a specified price or better. Limit orders offer more control over your entry/exit price. However, your order may not be filled if the market doesn’t reach your limit price.
- Stop-Loss Order: a type of order that becomes a market order once a certain price threshold is reached. Stop-loss orders are primarily used to limit potential losses if you think the market keeps moving against your position.
Online trading involves significant risks and you can lose all your capital. Information on this website is for educational purposes only and should not be considered professional financial advice. Consult a qualified advisor for personalized guidance.