How to buy stocks in Canada

Wondering how to invest in stocks in Canada? E-Trade launched in 1992 as a platform for retail investors to place trades online. Today, brokers new and old continue to harness new technology and the power of the internet to bring stock trading to the masses. Let’s walk through how to buy stocks in Canada.

How to buy stocks in Canada: 5 easy steps

1. Choose an online stock trading platform
2. Sign up for an account
3. Set up a funding method to pay for the transaction
4. Choose the stocks you want to buy
5. Place your order

Step 1: Choose an online stock trading platform

While big brokers TD Direct Investing, CIBC Investor’s Edge, BMO InvestorLine, RBC Direct Investing and Scotia iTRADE are still going strong, they’re not the only brokers in town anymore. The increasing competition over the past few decades has transformed the way everyday investors access the stock market. It’s delivered more user-friendly platforms, greater convenience, faster trading and lower fees.

Our top picks for where to invest in stocks in Canada

Promoted for Beginners

CIBC Investor's Edge

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• Easy to use platform
• Low fees
• Student and young investor discounts

Best for Lowest Commissions

Finder Award

Interactive Brokers

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• Access to international stock exchanges
• Low margin rates
• Powerful research tools

Promoted for Free Trades

National Bank Direct Brokerage

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• Commission-free trading
• Several account types available
• Access to array of research tools

How do I choose the right stock trading app for me?

• Compare features. Think about your level of trading experience and what kind of features are important to you, along with the platform’s ease-of-use.
• Compare fees. While most brokers don’t charge a stock trading fee, some charge extra for specialized investment products. High-value trades are often charged as a percentage of the total trade value, rather than a fixed fee.
• Tradable securities. Most brokers offer at least stocks and exchange-traded funds (ETFs). Big brokers like Interactive Brokers have the largest lineup of investment options, while more beginner-focused brokers like Wealthsimple offer a more simple lineup of stocks, ETFs and cryptocurrency.
• Research tools. Online brokers usually offer market news, updates and other research tools that will let you investigate the trading history of individual stocks.
• Customer support. How fast can you get a hold of customer support if you’re having an issue with your investment? The quality of customer support and the ease at which you can contact them is no less important than fees or research tools.

Using a robo-advisor

If buying and selling stocks still seems intimidating, you could consider using a robo-advisor. Robo-advisors are algorithms that invest in a mix of stocks (and bonds) according to your risk tolerance, financial situation and investing timeline. This passive investing approach saves time too, as you don’t need to research what shares to buy and sell and when to do so.

Step 2: Sign up for an account

Brokers, banks and other financial services companies follow a regulatory process known as Know Your Client (KYC), which is a process to verify the identity and other credentials of customers. When you’re applying for a brokerage account, you’re taking part in the KYC process.

The exact steps for opening a stock trading account vary between platforms, but here’s how it generally works:

• Start an online application. Most platforms let you complete the entire application process online, although some may require extra steps like visiting a brokerage branch in person to verify your identity and complete the process.
• Create your profile. Create the username and password with which you’ll access your account. You may have to confirm any devices linked to your trading account before your application can proceed.
• Select an account type. TFSAs and RRSPs are popular types of accounts, although you may also be able to open other accounts like trusts and business accounts.
• Enter your personal information. You’ll typically need to provide your full name, email address, residential address, phone number and Social Insurance Number (SIN).
• Enter basic employment and financial information. You may be asked to provide the name of your employer, basic financial information and bank account details to transfer funds to your investment account.
• Verify your ID and residency. Usually, you need to email or upload a copy of valid, government-issued photo ID (such as a driver’s license or passport) to your brokerage website.
• Submit your application and wait for approval. Once you’ve provided all required information and documents, submit your application. Approval often takes anywhere from 1-2 business days.

Step 3: Set up a funding method to pay for the transaction

While you can open an account with most brokers without a minimum deposit, you can’t trade until you have sufficient funds in your account to cover the cost of the transaction.

One of the easiest ways to do this is to link your bank account and transfer funds via Electronic Funds Transfer (EFT). EFT transfers take between 1 and 3 business days to complete, but some brokers offer a feature called instant deposits, which allow you to trade before the funds have settled.

Other funding methods include wire transfer, cheque deposit and account transfers from other brokerage accounts. Credit cards are typically not permitted as a brokerage account funding method.

Step 4: Choose the stocks you want to buy

Where do you get investment ideas? In other words, how do you choose the best stocks to buy?

A good place to start is with an industry that interests you and then explore the different companies in that space. Identify key players and young companies with potential for growth but also figure out which companies are falling, or have fallen, out of favor. If you want to follow a Warren Buffett saying, “never invest in a business you cannot understand.”

Tools like stock screeners can help you narrow down stocks by sector, industry, price range and more. Search for companies by name or ticker symbol. If you’re on the fence about a purchase, add the stock to your watchlist to keep an eye on its performance. Analyst research reports can give you valuable insight into companies and guidance as to whether a particular company is a good investment.

At the end of the day, you should perform as much in-depth research as possible until you’re comfortable investing.

Step 5: Place your order

With a stock in mind and funding in place, it’s almost time to invest. But before you buy any shares, you should know how much money you want to invest in any particular stock.

Consider your budget, investment goals and your overall portfolio allocation. With the advent of fractional shares, you no longer need the entire share price to invest. Fractional share trading lets you invest specific dollar amounts in a stock instead of having to buy whole shares. Though not every broker offers this feature.

Types of stock orders

There are two ways to purchase stock: placing a market order or a conditional order.

• Market orders. Place a market order when you want to buy a stock immediately at the current market price. If you’re buying shares of a volatile stock, the price at which your order is executed could be higher or lower than the last traded price.
• Conditional orders. Place a conditional order, such as a limit order or stop order, when you want a stock to meet specific conditions before you invest. A limit buy lets you set a maximum purchase price for your order. If that price becomes available within your specified time, the trade is executed. If the stock never hits the specified price, your trade won’t be executed.

Once you’ve entered details like the type of order you want to execute and the number of stocks you’d like to purchase, submit the order.

How much does it cost to buy stocks in Canada?

The cost to buy stocks depends on which trading platform you’re using. Some online brokerages like Wealthsimple charge no fees or commissions to trade stocks, and some require a minimum deposit to open a trading account. Other brokers charge extra for specialized investment products. High-value trades are often charged as a percentage of the total trade value, rather than a fixed fee.

You can compare the fees and features of the best stock trading apps here.

What happens after I buy a stock?

Once the broker executes your order, you’re considered a shareholder. Congratulations! And now you can either hold the stock or sell it.
Buy-and-hold investors hold on to stocks in the hopes that they will eventually increase in value. They may hold a stock for months or years before they decide to sell it — hopefully at a profit.

Active traders, on the other hand, may offload a stock quickly. Specifically, day traders engage in intraday trading, which involves buying and selling a stock over a single trading day. The aim here is to take advantage of sudden changes in a stock’s price. This type of trading is complex, fast-paced and requires a comprehensive understanding of the market. It’s not a suitable trading strategy for beginners.

Ultimately, what you do with the assets in your portfolio depends on your investment goals, strategy and risk tolerance. Make sure to check in occasionally on your investments to track their performance and ensure your portfolio still aligns with your investment goals.

When should I sell my stocks?

The process of selling your shares is equally as important as buying them. But not every investor follows the same playbook.

Some experts say you should consider selling your stocks if the company’s fundamentals change for the worse or if the competitive landscape changes. For instance, you may decide to sell your stock in a company whose earnings continue to steadily decrease or whose performance has dramatically weakened compared to industry peers.

Another reason to sell might be that you need the money for a more attractive investment.

Ideally, investors want to sell when it will be the most profitable. But timing the market is incredibly difficult, if not impossible, and can be costly. This is why it’s important to develop a strategy and stick to it.

• How do I sell my stocks?

  Selling stocks works similarly to buying stocks. Choose whether you want to sell via a market or a conditional order.

  • Market orders mean the shares are sold immediately at the best available price.
  • Conditional orders let you set specific conditions for executing an order. If the conditions aren’t met, the order doesn’t take place.

  Advanced orders, like stop-loss and trailing stop-loss orders, are more complex and are best reserved for more experienced traders.

  • A stop-loss order sells your shares if they fall to a predetermined price, limiting your losses.
  • A trailing stop, is an order in which you set a defined percentage or dollar amount away from the stock’s current price. If the share price rises, the trailing stop rises, or “trails” by that predefined dollar amount or percentage.

What are the benefits of buying stocks online?

• Lower fees and faster trades. Online trading is cheaper and faster than broker-assisted trades, which can cost upwards of $25 or more per trade.
• Convenience. Sign up for an account in minutes, and trade from anywhere with an internet connection.
• More control. Online trading gives you complete control over your portfolio and investments. Do your own research, and place your own trades without influence from brokers or financial advisors seeking a commission.
• Complimentary research and trading tools. Many online brokers provide free educational resources and research tools that can help you better understand the markets and investing.
• Real-time updates. Monitor asset prices, stock market news and your portfolio from your phone, tablet or laptop.

Is it safe to buy stocks online in Canada?

Generally speaking, yes, it’s safe to buy stocks online. Most online trading platforms employ safety measures like 24/7 infrastructure monitoring and two-factor authentication as standard protocols along with maintaining a membership or good standing with the IIROC. But, like with anything on the internet, there are still some things to watch out for:

• Technical problems. Your ability to trade and invest depends on the underlying platform, its software and its servers. If you can’t access your account because of a server outage, you could miss an opportunity to buy or incur losses if you can’t sell.
• Security concerns. Hackers constantly target online brokers, and a breach could result in the theft of personal and financial information.
• Making rash investment decisions. Emotional investing and unfettered access to the market can lead to impulse trading, which can be costly. Traders can also get caught up in the excitement of fast-moving markets, investing too much too quickly and without first taking the proper time to understand the stock.

Compare more online stock trading platforms in Canada

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Name	Product	Finder Rating	Available Asset Types	Stock Trading Fee	Account Fee	Signup Offer	Table description
CIBC Investor's Edge CIBC Investor's Edge		Finder Rating: ★★★★★ 3.8 / 5	Stocks, Bonds, Options, Mutual Funds, ETFs	$4.95–$6.95	$0 if conditions met, or $100	N/A	An easy-to-use platform with access to a variety of tools to help you trade with confidence.	Go to site View details	Compare	loading Fetching your data...
Interactive Brokers Interactive Brokers Finder Award		Finder Rating: ★★★★★ 4.3 / 5	Stocks, Bonds, Options, ETFs, Currencies, Futures	min $1.00, max 0.5%	$0	N/A	Winner for Best Overall Broker in the Finder Stock Trading Platform Awards.	Go to site View details	Compare	loading Fetching your data...
National Bank Direct Brokerage National Bank Direct Brokerage		Finder Rating: ★★★★★ 4.2 / 5	Stocks, Bonds, Options, Mutual Funds, GICs	$0	$0 if conditions met, or $100	Get $0 commission on all transactions with promo code: finder		Go to site View details	Compare	loading Fetching your data...
Questrade Questrade		Finder Rating: ★★★★★ 4.3 / 5	Stocks, Bonds, Options, Mutual Funds, ETFs, GICs, International Equities, Precious Metals	$4.95 - $9.95	$0	Get $50 in free trades when you fund your account with a minimum of $1,000.	Opt for self-directed investing and save on fees or get a pre-built portfolio to take out some of the guesswork.	Go to site View details	Compare	loading Fetching your data...
Qtrade Direct Investing Qtrade Direct Investing		Finder Rating: ★★★★★ 3.7 / 5	Stocks, Bonds, Options, Mutual Funds, ETFs, GICs	$6.95 - $8.75	$0 if conditions met, otherwise $25/quarter	Get up to $150 sign-up bonus. Use promo code BONUS150. Conditions apply. Ends June 30, 2023.	Low trading commissions and an easy-to-use platform with access to powerful tools and a wide selection of investment options.	Go to site View details	Compare	loading Fetching your data...

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Bottom line

• Buying stocks online begins with comparing and choosing a quality trading platform.
• Before committing money, learn about your investing options and research potential companies to invest in.
• Try to remove emotions from investing and be prepared to follow your plan.

Not ready to buy? Practice your trades risk-free with a stock-trading game.

Frequently asked questions on how to invest in stocks

• Do all of Canada's Big Five Banks have stock trading platforms?

  Yes, we review what each of Canada's Big Banks have to offer self-directed investors in the following guides:

  • TD Direct Investing
  • RBC Direct Investing
  • CIBC Investor's Edge
  • Scotia iTRADE
  • BMO InvestorLine

• What stocks can I buy online?

  All types of stocks are available online, but access to those stocks will depend on the asset types your trading platform supports. For instance, US exchange-listed stocks from popular indices like the S&P 500 are available on most platforms, but not every broker offers access to over-the-counter (OTC) securities, penny stocks or internationally-listed stocks.

• What is the minimum trade value?

  The minimum trade value is usually the share price of the stock. Brokers that offer fractional share trading, however, let you invest a specific dollar amount instead of requiring you to purchase whole shares. This lowers the minimum trade amount, often to just $1 or $5.

• Can I just buy stocks on my own?

  Yes, with an online brokerage account, you can buy stocks on your own and without the assistance of a stock broker.

• How long will it take to process my order?

  How long it takes to process your order depends on whether you enter a market order or a conditional order. Market orders execute immediately and at the best available price. A conditional order will only be executed if certain criteria are met.

• Can I change or cancel my order?

  You can change market orders any time prior to submission. Once executed, you cannot reverse a market order. Investors can change or cancel standing orders, such as a limit order, any time before the order has been filled.

• Can I invest in US stocks if I live in Canada?

  Yes, you can buy US stocks through Canada-based brokerages that provide access to US stock exchanges. Most Canadian brokerages let you trade US stocks.

  Dive deeper How to buy US stocks in Canada

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