The emergence of discount brokerages in recent years has made day trading a whole lot more accessible to all Canadians. In this guide, we’ll look at six of the best platforms for day trading in Canada, compare day trading strategies and examine some common risks traders need to watch out for.
As a frequent trader, it’s important to be aware of all platform fees that will apply to your trades. Check out the table below for details of the fees charged by some of the best day trading platforms in Canada.
| Platform | Stock trading fee | ETF trading fee | Options trading fee | Withdrawal fee | Currency conversion fee | Account fee |
|---|---|---|---|---|---|---|
| Interactive Brokers | Min $1.00, Max 0.5% | Min. $1.00, Max. 0.5% | $1.00–$1.25 per contract (min. $1.50) | $2–$12 per withdrawal (1 free/month) | 0.08–0.2 bps trade value, min $1.00–$2.00 USD | $0 |
| Questrade | $0 | $0 | $0 + $0.99 per contract or free for USD equity options | $0 for Interac e-Transfers (up to $50,000 CAD or $25,000 USD) | 1.5% | $0 |
| $0 | $0 | $0 + $0.75 per contract | N/A | N/A | $0 per quarter | |
| Moomoo | $1.49/stock | USD$0.99/share | US stocks and ETFs cost USD$0.99/stock (min. US$1.99 per trade) | Free withdrawals for both EFTs and $50 for wire transfers | 0% | $0 |
| CIBC Investor's Edge | $6.95 | $6.95 | $6.95 (+$1.25 per contract) | $0 | 0.2%–1.6% | $100 per year |
| National Bank Direct Brokerage | $0 | $0 | $0 commission + $1.25 per contract (min. $6.25) | $0 EFT ($50 per cheque withdrawal or external wire transfer) | Varies | $0 if conditions met, otherwise $100/year |
Day trading is a form of investing where you open and close trades in the same day. Unlike “buy and hold” investing, which focuses on stable growth over the long-term, day trading is all about profiting from the short-term price fluctuations of stocks, options, currencies and other securities.
Day traders buy and sell securities in rapid succession, placing anywhere from a few trades to hundreds of trades per day. Rather than focusing on a company’s financial statements and growth potential, day traders use advanced charts and technical analysis to identify patterns and potential price movements. They also trade based on market news and trends, so day trading is markedly different to a traditional approach to investing.
Two of the best day trading platforms in Canada are Interactive Brokers and Moomoo. Interactive Brokers impresses with its advanced trading platform and charting tools, its 90-plus order types and its widespread access to global markets. Moomoo offers day traders benefits like free Level 2 market data, competitive commissions and a variety of charting tools and technical indicators.
That said, the best platform for day trading in Canada may vary from one trader to the next. The right platform for you will depend on factors like the securities and markets you want to trade, the day trading strategies you want to execute and even which platform you find to be the most user-friendly.
Interactive Brokers and Moomoo are both well worth checking out if you want to start day trading in Canada.
Day traders aim to profit from short-term fluctuations and seize trading opportunities as they arise. The platform you choose should offer low-latency execution speed to allow you to take advantage of price movements.
The best day trading platforms in Canada offer commission-free trading or low brokerage fees. Some brokers also offer discounted commissions for frequent traders, allowing you to reduce your trading costs.
It’s also worth checking if the brokerage charges any account maintenance fees. If it does, these fees may be waived if you meet a minimum balance requirement.
The best day trading platforms allow you to trade a wide range of securities and access markets in Canada, the US and around the world. Check which assets you can trade with a particular brokerage before deciding if it’s right for you.
Real-time market data allows you to access up-to-date information about price and market movements. This gives you the ability to take advantage of trading opportunities as they arise. Check whether real-time data is included for free with your trading account or if you’ll need to pay a subscription fee.
Day trading focuses on technical analysis to inform many trading decisions. Check which charting tools and technical indicators the platform offers to help you detect patterns and trading signals.
Check which order types a trading platform offers to help you manage risk. Stop-loss orders and trailing stops are two popular options that can help you minimize losses.
The best day trading platforms offer a user interface that is easy to navigate and allows you to quickly and easily place trades. Many advanced trading software platforms also offer a customizable interface that you can adjust to suit your preferences.
Finally, check how and when you can access customer support. Can you contact your brokerage during trading hours? Are live chat, phone and email support all available?
Before you can find the best platform for day trading in Canada, you need to ask yourself a few questions:
Once you know exactly what you’re looking for in a platform, you can start comparing your options. Look for low fees, advanced charts and order types, real-time data and a user interface that’s easy to navigate.
Some brokerages also offer practice accounts or demo accounts that let you trade with fake money. These free accounts offer an easy way to get a feel for the platform and test out your trading strategies before switching to a live account.
If you want to sign up and start day trading in Canada, here’s what you need to do:
Before you can start day trading, it’s vital that you understand the risks involved. Day trading is complicated, requires a lot of hard work and is not guaranteed to turn a profit, so it’s only suitable for experienced, knowledgeable investors.
You’ll also need an in-depth understanding of financial markets and trading strategies before you can place your first trade. Staying up to date with market news and economic developments is a must too, so day trading is not the sort of profession you can expect to just stumble into half-heartedly and succeed.
If you meet all those requirements, you’ll then need to compare brokers to find one that offers the right combination of low fees, fast trade execution, advanced trading tools and a user-friendly interface. It’s then a matter of choosing which day trading strategy to use—a broker’s paper trading account can be a useful tool to help you test out potential strategies using real-world market conditions.
Day traders employ multiple strategies with the aim of making a profit. Here are some popular day trading strategies you might like to consider when you’re first starting out.
Scalpers take advantage of small price movements that happen throughout the day. They make frequent, short-term trades and aim to make a small profit from each trade.
Momentum traders take advantage of price trends. They buy securities that are rising in price and sell assets that are trending downwards.
As the name suggests, contrarian trading is the opposite of following the market trend. Rather than going with the prevailing market sentiment, contrarians do the opposite, selling in a bull market and buying in a bear market.
Range traders aim to identify a minimum and maximum price range that a security typically trades between. The upper limit is known as the resistance limit, and the lower limit is the support limit. Traders use these figures to predict which way the value of a security will move.
Just as its name suggests, day traders use this strategy to make trading decisions based on the latest market news that could drive the price of a security up or down. You’ll need to monitor the latest developments closely and quickly execute trades to take advantage of opportunities.
In the US, FINRA rules classify you as a pattern day trader if you execute four or more day trades within five business days. Under the rules, pattern day traders must maintain a balance of $25,000 in their margin account on any day that they day trade.
There’s no such minimum balance requirement in Canada. However, the brokerage you choose may require you to maintain a minimum balance if you want to trade on margin, so it’s worth checking the fine print before signing up for an account.
You’ll also need to make sure that you choose a brokerage that is regulated by the Canadian Investment Regulatory Organization (CIRO). The CIRO sets margin requirements for different investments, and the trading platform you choose must comply with all CIRO rules and requirements.
Learn more about the rules that apply in our guide to day trading in Canada.
No. FINRA’s pattern day trading rules, which stipulate that day traders must have a minimum balance of $25,000 to be allowed to trade, do not exist in Canada. So, if you use a Canadian broker, this margin requirement shouldn’t concern you.
But if you place margin trades on US financial markets through a US-based broker, you’ll need to comply with the pattern day trading rules. Check where your brokerage is regulated to determine which rules and requirements apply to you.
Is day trading worth it? The answer depends on you.
Day trading is highly complicated and requires a significant amount of time and knowledge. It’s not suitable for new investors, and it’s not suitable for people with a low risk tolerance.
But if you’re an experienced trader with an in-depth understanding of financial markets, and if you’re willing to devote the time needed to place and monitor trades, day trading has the potential to deliver high returns. Just be aware that the risk of high losses is also very real.
Quitting your job to become a full-time day trader might sound like a pretty sweet gig, but the reality is far from glamorous. Here are the common risks you need to watch out for when day trading.
Day traders place frequent trades, so brokerage fees every time you place a buy or sell order can quickly add up. You’ll need to look for a brokerage that offers zero-commission trading or low fees. And if you’re trading in currencies other than Canadian dollars, you’ll also need to take currency conversion costs into account.
Margin trading involves borrowing money from the brokerage to increase the size of your trades. While this allows you to amplify your returns, it also brings the potential for increased losses.
Trading on volatile markets means there’s a risk of the market moving rapidly against you. This brings the potential for substantial losses.
Successful day traders put effective risk management strategies in place to minimize losses and lock in profits. Use stop-loss, trailing stop and take-profit orders to help reduce risk when trading.
You need to take care to remain disciplined and stick to your day trading strategy. It’s all too easy to let emotions sway your decisions after suffering multiple losses, while overconfidence can creep in if you make several successful trades in a row.
You’ll need to declare the income you earn from day trading to the CRA. Day trading income is generally classified as business income rather than investment income in Canada, so consult a tax professional to make sure you fully understand your tax obligations.
Day trading is a high-risk way to make money. You’ll need to put effective risk management strategies in place to ensure that any losses you suffer don’t have severe financial consequences. Here are some common approaches traders use to help reduce risk.
Successful traders often set a specific limit on how much capital they will risk each trade. For example, you may decide to risk a maximum of 1% of your account balance per trade. This ensures that even if a trade doesn’t work, its effect on your total trading balance is limited.
Spread your risk around by trading different financial instruments and markets. This can help provide protection when the market moves against you, ensuring that you’re not over-exposed to a specific asset or sector.
A stop-loss order automatically places a buy or sell trade when a security reaches a price you specify. So if the market moves against you, the order will automatically be triggered before you can suffer a large loss. This allows you to protect yourself without having to constantly monitor a position.
For example, let’s say you buy a stock at $10 and expect it to increase in price, but you set a stop-loss order at $9. So, if the market moves opposite to how you expect and the share price drops to $9, the sell trade would automatically be triggered to minimize your loss.
On the flip side, you can also use a stop-loss order to lock in gains. So if the price rises to $13, you might want to set a stop-loss order at $12 in case the price movement reverses.
A trailing stop is a type of stop-loss order that allows you to lock in profits and limit losses. It automatically follows the price of a security when the market moves in your favour, trailing a specified percentage or number of points behind. Then if the market reverses and the price of the security hits your trailing stop level, your order will be automatically executed.
As an example, let’s say you buy a stock at $50 and set a trailing stop at 3%. If the stock price rises to $75, the trailing stop will adjust to $67.75 (3% below $75). If the price then falls to $67.75, the trailing stop will kick in and trigger a sell order.
Yes, you can practice day trading first before committing any real money.
Many brokerage platforms offer paper trading accounts that let you practice trading with fake money. They give you a chance to test out the trading platform’s features and try different trading strategies in real market conditions. If the market moves against you, you won’t be putting any real money at risk.
Paper trading accounts are also known as demo accounts, practice accounts and free trial accounts, so check if your brokerage offers one.
Dive deeper: Complete guide to paper trading
Day trading isn’t for everyone—in fact, it’s not suitable for most people. But if you’re an experienced trader with detailed knowledge of financial markets, it does offer the potential for lucrative returns. If you want to get started, compare online stock trading brokers to find the best day trading platform in Canada for you.
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