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Stock trading for beginners: how to buy stocks in Canada

In this guide to stock trading for beginners, we explain how to start stock trading in 7 simple steps.

Buying stocks in a company is actually pretty simple, especially with the numerous stock trading platforms out there that allow you to buy stocks with minimal fees. Read on for our guide to stock trading for beginners to learn more on how to buy stocks in Canada.

How to buy stocks in 7 steps

  1. Choose an online stock trading platform
  2. Sign up for an account
  3. Deposit money into your trading account
  4. Choose the stocks you want to buy
  5. Place your order to buy stocks
  6. Monitor the performance of your stocks
  7. Sell your stocks (if and when you want to)

Step 1: Choose an online stock trading platform

Before you get into buying stocks, you’ll need to find a broker. These days, most people go for an online stock trading platform (also known as an online broker), although you can still find brokers that work face-to-face or over the phone in Canada.

Compare stock trading platforms to find the right one for you

Name Product Finder Rating Stock Trading Fee Account Fee Available Asset Types Offer
FREE TRADES
Wealthsimple Trade
Finder Rating:
★★★★★
3.9 / 5
$0
$0
Stocks, ETFs
Get 2 free stocks when you deposit and trade $150.
Scotia iTRADE
Finder Rating:
★★★★★
3.8 / 5
$4.99 - $9.99
$0
Bonds, Options, Mutual Funds, ETFs, GICs, International Equities
Interactive Brokers
Finder Rating:
★★★★★
4.1 / 5
Min. $1.00, Max. 0.5%
$0
Stocks, Bonds, Options, ETFs, Currencies, Futures
OFFER
CIBC Investor's Edge
Finder Rating:
★★★★★
4 / 5
$4.95 - $6.95
$0 if conditions met, otherwise $100/year
Stocks, Bonds, Options, Mutual Funds, ETFs
Get up to $2,000 cash back. Conditions apply. Offer ends March 1, 2022.
Questrade
Finder Rating:
★★★★★
4.2 / 5
$4.95 - $9.95
$0
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs, International Equities, Precious Metals
Get $50 in free trades when you fund your account with a minimum of $1,000.
Qtrade Direct Investing
Finder Rating:
★★★★★
4.1 / 5
$6.95 - $8.75
$0 if conditions met, otherwise $25/quarter
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs
Get up to $5,000 cash back. Conditions apply. Offer ends March 1, 2022.
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Compare up to 4 providers

Ask yourself these questions to help you choose:

  • Are you happy to buy and sell stocks on your own?
  • Do you want to be given ideas or are you happy to find them yourself?
  • How much research and information do you need?
  • How much are you willing to pay per trade?
  • Are you going to be buying Canadian or international shares?
  • Are you looking to trade other assets like ETFs?

Step 2: Sign up for an account

Once you’ve chosen a platform, you’ll need to register for an account. This step is usually free, but keep in mind that some providers may charge subscription fees or other ongoing fees for features such as market research. Some brokers might also have minimum deposit thresholds.

The registration process takes place online and if you’re a new customer you’ll usually need to provide:

  • Personal details. This includes your name, email, date of birth, address, Social Insurance Numbers (SIN) and employment status.
  • Government ID. Your passport or driver’s license will likely be acceptable.
  • Payment details. This is the debit card, credit card or bank transfer information you’ll use to fund your stock trading account.

Finder also has a guide that goes into more detail about how to open a stock trading account.

Step 3: Fund your account

Most online trading platforms require you to link a bank account to deposit money to invest, and it often takes two or three business days for that deposit to clear. However, some brokerages allow “instant deposits” that make it possible for you to invest the deposited amount right away while it is being processed. Credit cards are typically not allowed for depositing funds into a brokerage account.

Stock trading fees

Typically, you’ll pay a trading fee for buying and selling stocks. If this is a fixed amount (say ten dollars or less), it becomes more economical on larger stock purchases.

Alternatively, some brokers charge a percentage of the assets that you hold on the platform. You’ll need to crunch the numbers to work out which one of these options is likely to suit you best.

Step 4: Choose the stocks you want to buy

Start researching stocks that match your investment goals. To help you make informed decisions, access a wide range of market research, analysis and even trading recommendations through your platform. You’ll also want to monitor your prospects’ performance over time.

When re-evaluating the company before you invest, ask yourself some questions:

  • Has the stock price changed since you first looked at it? If so, are you happy to buy it at the new price?
  • Have any new headlines or recent company announcements emerged? Have any new risks emerged?
  • Do you understand how the company makes money?

Some other tips for picking stocks for beginners:

  • Do your homework. Making informed trading decisions is crucial to the success of your investments. Research the financial health and growth prospects of companies by poring over annual reports, keeping an eye out for company alerts, reading prospectuses and accessing research reports.
  • Stay up to date with the economy. Understand the health of the economy, interest rate decisions, government policy changes, levels of investor confidence, exchange rates and the performance of stock markets in other countries. All of these can influence when to invest.
  • Start with blue-chip companies. One of the safest options for anyone starting out in the stock market is to invest in blue-chip companies. These are Canada’s biggest, most established companies; many are included in the Dow Jones Industrial Average. They usually offer the best chance for minimizing your risk and providing steady returns.
  • Buy what you know. Rather than diving in at the deep end and investing in a company in a field you know nothing about, start with industries and businesses you know and understand.
  • Diversify. To minimize your exposure to risk, diversify your portfolio across a range of different industries. If you buy stocks across five or six industries instead of only one or two, you can be better protected against losses if one particular industry experiences a sharp downturn.

And remember, only invest what you can afford to, as the value of stocks can go down as well as up. Finder also has a guide on how to start investing in stocks, including how to open an account and pick stocks.

Step 5: Place your order to buy stocks

Once you’ve decided which stocks to buy, purchasing them is usually the easy bit! If you’re in your online account, you’ll get offered a price and can just click a button to “buy now.” You will have the option to select the type of order you wish to place: a market order, limit order or stop order. You can get a breakdown of each type of order in our guide to opening a stock trading account.

Step 6: Monitor the performance of your stocks

There are 2 ways you make money from investing:

  1. Capital gains, also known as the increase in the capital value of the stock
  2. Dividend payouts (for more on dividend stocks, check out our guide to the best Canadian dividend stocks)

The frequency with which you monitor your investments will depend on your investment strategy. For example, if you have a long-term investment strategy, you may only check in and see how your stocks are performing every month. If you have a medium-term strategy, it may be a good idea to check performance more often.

You may also want to set limits on your stock trades. For example, you could set an automatic sell if the stocks lose more than 10% or gain more than 50% of their value. This will limit how much money you can lose, or it may prompt you to sell out when the stocks get ahead of themselves.

What are dividends and how do they work?

Step 7: Sell your stocks (if you want to)

When you decide to sell your stocks, the process is very similar to the method of buying stocks described in Step 5. When you’re logged into your online trading account you’ll be able to select an option to sell your stocks at the current market price. You will receive the appropriate confirmation that your stock has been sold, and the revenue from the sale will arrive in your online account.

Bottom line

That’s it! You now know how to buy stocks in Canada. All that’s left to do is put these 7 simple steps for investing in the stock market into action in order to own stocks in a company. For more on how to start investing for beginners, take a look at our guide to opening a trading account and buying stocks online.

Online stock trading


Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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