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How to open a brokerage account in Canada

A beginner's guide to choosing an online platform, opening your trading account and buying stocks online in Canada.

If you are new to online stock trading, you may be wondering which platform is best for stock trading for beginners. Find out how to open a brokerage account in Canada, how to place an order, which stock brokers are best for beginners, and more in this guide.

How to open a brokerage account in Canada

You can open an online stock trading account by following the steps below. Just be aware that these steps may vary based on which stock trading platform you sign up with.

  1. Compare stock trading platforms.
    Compare different platforms to find the one that offers all of the features you want at a price you can afford. Keep in mind that some platforms require you to pay account maintenance fees and commissions for every trade you execute while others are almost entirely free but may have fewer trading options.
  2. Fill out account details.
    You’ll need to provide your full name and a valid form of government-issued photo ID to get started. You may also need to supply personal details such as your email address, phone number, residential address and Social Insurance Number (SIN).
  3. Submit your application.
    Your application to open a stock trading account will usually be processed within 1-2 business days.
  4. Link your bank account and fund your trading account.
    You’ll need to supply details of the bank account which will be used to finance your trades and you may be required to deposit a minimum amount. Some stock trading platforms will also require you to open a cash management account with a specific financial institution before you can start trading.
  5. Start trading!
    Once your account is open and funded, you can start buying and selling. You can also open different account types, like registered and non-registered accounts, to trade within.

How to start investing in the stock market

Best stock trading platforms for beginners

Wealthsimple

Get $25 when you open a Wealthsimple account and fund at least $150.

Finder rating: 3.9 / 5 ★★★★★

  • Go with this platform if you want to Get $25 when you open a Wealthsimple account and fund at least $150..
  • Look elsewhere if you want to trade more complex securities like options or if you want to hold USD in your account.

Scotia iTRADE

Finder rating: 3.8 / 5 ★★★★★

  • Go with this platform if if you are a beginner who wants the comfort of a well-established financial brand.
  • Look elsewhere if you want a quality mobile experience.

CIBC Investor's Edge

Young investors 18 to 24 can get free online trades and a $0 annual account fee (conditions apply)

Finder rating: 4 / 5 ★★★★★

  • Go with this platform if you want to be able to trade a variety of securities and are less concerned about trading commissions.
  • Look elsewhere if you want low fees.

Questrade

Get $50 in free trades when you fund your account with a minimum of $1,000.

Finder rating: 4.2 / 5 ★★★★★

  • Go with this platform if you want low fees and the ability to trade various types of securities.
  • Look elsewhere if you want low fees but you aren't ready to start buying anything other than stocks and ETFs.

Qtrade Direct Investing

Get almost $500 in commission free trades when you fund your new account with a minimum of $10,000. Conditions apply. Ends August 31, 2022. Plus, top up your transfer to $15,000 and Qtrade will cover the transfer fee up to $150.

Finder rating: 4.1 / 5 ★★★★★

  • Go with this platform if you want competitive commissions and access to educational tools and online tutorials.
  • Look elsewhere if you aren't planning to have a minimum of $25,000 in your account or fund it regularly (since you will incur a quarterly fee).

Interactive Brokers

Finder rating: 4.1 / 5 ★★★★★

  • Go with this platform if you are an experienced investor and want reams of information and fancy analytical tools to help you trade.
  • Look elsewhere if you are a new investor.

BMO InvestorLine

Finder rating: 3.9 / 5 ★★★★★

  • Go with this platform if you want an easy-to-use platform with low trading commissions and plenty of investment options.
  • Look elsewhere if you want don't want to pay an annual fee to maintain your account.

TD Direct Investing

Finder rating: 3.8 / 5 ★★★★★

  • Go with this platform if you don't plan on making a lot of trades.
  • Look elsewhere if you want low fees.

RBC Direct Investing

Finder rating: 3.8 / 5 ★★★★★

  • Go with this platform if you don't plan on making a lot of trades.
  • Look elsewhere if you want low fees or have less than $15,000 to invest.

National Bank Direct Brokerage

Finder rating: 4.1 / 5 ★★★★★

  • Go with this platform you want commission-free trading from a Canadian bank.
  • Look elsewhere you want to trade on a mobile app.

How do I choose an online stock trading platform?

You’ll need to carefully consider your trading needs before deciding on the right online stock trading platform. Some of the features to consider include:

  • Fees and commissions. Look at how much you’ll have to pay for your stock trading account before you sign up. There are many mobile platforms out there that come with zero fees and zero commissions (such as Wealthsimple).
  • Research and informational resources. Some platforms offer resources such as educational tutorials, market analysis and investment advice while others have relatively few. For a beginner, you might want to access research and informational tools, or you can do your own investigating through Youtube, Reddit and more.
  • Customer service. Many trading platforms operate entirely online while others come with dedicated advisors. Think about how much help you’ll need and pick the service that has the best online reviews for customer support.
  • Trading knowledge and experience. Beginners can usually afford to pay less for a more basic platform, but keep in mind what features you might want to have access to in the future.
  • Available markets. Some stock trading platforms only give you access to the Toronto Stock Exchange (TSX) while others let you place international trades. Pick the platform that has the best mix of markets that you want to trade in.
  • Available assets. Think about what types of trades you want to make. Are you primarily interested in equities (stocks, ETFs)? Choose the platform that has the stock trading instruments you’ll actually use.

How much does it cost to sign up with an online stock trading account?

The amount you’ll have to pay to sign up for an online trading platform will depend on which platform you choose and what fees and commissions apply to your account:

  • Monthly or annual fees. Most online or mobile stock trading accounts won’t come with a monthly or annual account fee. You may have to pay a maintenance fee to sign up with higher-end trading platforms which will usually be calculated as a percentage of your account holdings. Some platforms also charge an inactivity fee if you don’t make a certain amount of trades, or a minimum balance fee if you have less than a certain amount in your account.
  • Commissions. Many stock trading platforms charge you a commission every time you execute a trade. However, Canada has seen the emergence of some commission-free platforms in recent years, like Wealthsimple. Other platforms offer lower-than-average commissions. You’ll want to keep this in mind if you plan to buy and sell large quantities of stocks.

How to buy stocks in Canada

Now that you’ve opened an account, you’re ready to start trading. Here’s how to buy stocks online:

1. Fund your account

You need sufficient funds in your online trading account to cover the cost of the transaction, including any fees that apply.

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 what they call “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.

2. Choose the assets 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.

Also consider the number of shares you want to buy. This is determined by your budget and your investment goals, but keep in mind that most trading platforms require you to buy full shares. So if a company stock trades for $1,000/share, you’d need to invest $1,000 to buy a full share. However, some trading platforms are beginning to offer fractional shares.

3. Place your order

This is where trading can get confusing for novice investors. You have three main options when placing a trade to buy shares:

  • Market orders. Use this when you want to buy a share immediately at the best price currently available, though you risk paying more than you expected if shares are difficult to trade or prices are volatile.
  • Limit orders. Set a maximum purchase price for your buy order. If that price becomes available within your specified time period, your trade is executed. Here you risk not trading at all if the price changes too much. You can generally set your order for the day or until you decide to cancel it.
  • Stop orders. Set a “stop price”. If that specified price is hit, the order is converted to a market order and is filled at the next available market price.

Once you’ve entered all the specifics of your transaction, review all those details before placing your buy order.

4. Monitor the performance of your investments

Monitor the performance of your shares against your investment plan. However, how often you monitor them depends on your strategy.

For example, if you have a long-term investment strategy, you may only check in and see how your shares are performing every month. If you have a medium-term strategy, it may be a good idea to check each night or each week.

Review the performance of your investments by logging into your trading account.

5. Sell your shares

If you decide to sell your shares, the process is similar to buying shares in step 4. Choose whether you want to sell via a market or a limit order.

  • Market orders mean the shares are sold immediately at the best available price.
  • Limit orders allow you to set the minimum sale price you’re willing to accept.

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

  • A stop-loss order sells your shares if they fall to a predetermined price you set to limit your losses.
  • A trailing stop, if available, is a percentage loss from the stock’s highest price rather than a specific price you set, so it “trails” or follows the stock price higher. For example, if you set a 25% trailing stop-loss order and the stock rose 10% before falling 25%, your sell order is triggered at a loss of only 15% from the price you bought.

How to pick stocks for beginners

To get more out of your online stock trading, consider these tips:

  • 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.
  • What about speculative stocks? Small companies, whether they’re listed on a stock exchange or traded over the counter, have a shorter business history. Some investors find these shares attractive because they offer the potential for large returns – but could also suffer large losses.
  • 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.

Our list of the best Canadian stocks to buy right now

Risks of online stock trading

Before you start buying and selling stocks, be aware of all the risks involved, including:

  • Financial losses. A company’s stock prices can fall dramatically and even drop as far as zero. This can mean significant financial losses for investors.
  • Last in line. Shareholders are usually the last paid when a company goes broke. So there’s a chance you won’t get your money back.
  • Stress. The stock market fluctuates daily, which causes plenty of stress for investors. If you can’t afford the ups and downs, you’re better off looking for a safer and steadier investment option.
  • Unexpected problems. Even with thorough research into a company, you can’t predict the future. Natural disasters, terrorist attacks, pandemics, bad company news and even changes in government policy can all occur unexpectedly and adversely affect the price of shares.
  • Lack of expertise. While investing in the stock market sounds easy in theory, it can get quite complicated if you don’t know what you’re doing. First-time investors take investing slowly.
  • Getting in over your head. Don’t bite off more than you can chew. Take a cautious approach when investing in stocks, property or anything else.

Bottom line

It’s easier than ever to grow your money by investing with a stock trading account or a Robo-Advisor. Find out how to open a stock trading account in Canada and get tips for how to choose the best platform when you’re ready to start investing for the first time. You can also use this post to compare stock brokers that are best for beginners.
Check out our stock trading guide for everything you need to know.

Frequently asked questions about stock trading for beginners

Image from Getty Images


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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