Online trading platforms make it easier than ever to start buying and selling stocks yourself at a much lower cost than a traditional full-service broker. It’s quick and easy to open trading accounts completely online, so let’s walk through a step-by-step guide on how to open a stock account in Canada.
The exact steps for opening a stock trading account vary between platforms. But while there may be some minor differences between brokers, the steps you need to follow will look something like those outlined below.
Let’s take a closer look at each step in more detail.
From trading platforms backed by the Big Five banks to a host of discount brokerages, there are plenty of options to compare when choosing a trading platform. Each broker offers its own fee structure, account types, trading options and platform features, so shop around to find one that’s right for you.
If you’re a new investor, key features to look for include:
More experienced investors may want a trading platform that offers features like options trading, margin trading, charting tools and advanced order types.
Once you’ve chosen a broker, head to their website and click on the link to open an account. You’ll need to be a Canadian resident, the age of majority in your province or territory, and have an active bank account to be eligible to apply. You can also save time by having any necessary documents—like proof of ID, your SIN and bank account details—ready before beginning an application.
There are two main types of brokerage accounts to choose from—self-directed accounts and managed accounts.
The next decision you need to make is whether you want a non-registered or registered trading account. If you decide on a non-registered account, for new investors, the best approach is to open a cash account, which lets you trade stocks with your own money. Experienced traders can also consider a margin account, which lets you trade with money you borrow, but margin trading is risky and not suitable for new investors.
You also have the option of choosing a registered account that offers tax advantages and other benefits. Just make sure you stay within your CRA contribution limits, as overcontributing can result in penalties. Popular options include:
You may also be able to open a joint account to share your investments with another person.
Personal and contact information
You’ll need to provide your:
Many platforms use two-factor authentication, such as one-time codes sent to your phone via text or an authenticator app, to prevent unauthorized account access. You may have to confirm the phone number and email address linked to your trading account before your application can proceed.
Employment and financial information
To satisfy Know Your Client (KYC) regulatory requirements, brokers may ask you to provide the name of your employer and some basic financial information. This information is requested to help brokers comply with regulations designed to prevent fraud and money laundering. You’ll also need to provide bank account details to transfer funds to and from your investment account.
For security purposes, you’ll need to provide a copy of valid, government-issued photo ID (such as a driver’s license or passport) to your broker. It’s quick and easy to upload a photo of your ID online or via your trading platform’s mobile app. Just make sure the name on your ID matches the name you provide when creating your brokerage account.
Your broker may also request a selfie to match your face to your ID, as well as an extra document as proof of ID or your residential address, such as a recent utility bill or bank statement that shows your name and address.
Once you’ve verified your ID and completed your application, approval often takes anywhere from 1 to 2 business days. There could be delays if you’re missing information or your ID is unclear.
Now it’s time to deposit funds into your account so you can start trading. Deposit methods vary between brokers, but you may be able to fund your account by:
Transfer times can vary depending on the method, with Interac e-Transfer often being the fastest. Some brokers may also require a minimum deposit before you can start trading, but many have no minimum deposit requirements.
Once your account is open and funded, you can start buying and selling a range of securities, including stocks, ETFs, bonds, mutual funds and options. Top brokerage platforms offer both online and mobile app trading, making it easy to invest just about anytime, anywhere.
Many platforms also support fractional shares, which allow you to buy a portion of a share instead of a whole one, making it easier to invest in high-priced stocks with smaller amounts of money.
When placing trades, you can typically choose between different order types, such as market or limit orders, which determine how and at what price your trade is executed. Keep in mind that markets operate during set trading hours, and orders placed outside those hours may be filled later when trading resumes.
Make sure you decide on an investment strategy before placing any trades. You’ll also need to research a stock or ETF thoroughly to work out whether it aligns with your investment goals and risk tolerance.
To make comparing even easier we came up with the Finder Score. Trading costs, account fees and features across 10+ stock trading platforms and apps are all weighted and scaled to produce a score out of 10. The higher the score, the better the platform—it's that simple.
The assets you can trade vary from one broker to the next. Some trading platforms focus only on Canadian and US stocks and ETFs, while others provide access to global stock exchanges as well as a range of other asset classes.
You can open a trading account to invest in:
Simply opening a trading account won’t have tax implications, but that changes when you start trading.
If you open a non-registered account, you’ll need to report any investment income you receive on your tax return. This includes interest income, dividend payments and capital gains when you buy a security and then sell it for a higher price.
Losses in non-registered accounts can be used to offset capital gains, and unused losses can be carried back up to three years or forward indefinitely to reduce future taxable gains. Dividends from Canadian companies may also qualify for the dividend tax credit, which can lower the amount of tax owed. However, foreign withholding tax may apply to dividends from US and other international investments.
How you’re taxed also depends on whether the CRA classes you as an investor or a trader. Typical investors invest for the long term, and only 50% of their capital gains are taxable. But if you’re a day trader who makes frequent buy and sell trades to profit from short-term price movements, your investment income is treated as business income for tax purposes and 100% of it will be taxed.
Of course, if you open a tax-sheltered account like a TFSA or RRSP, you can take advantage of various benefits to help reduce the amount of tax you pay.
Learn more about your tax obligations in our stock trading tax guide.
It’s easier than ever to open trading accounts in Canada and start investing in stocks, ETFs or other securities. Most self-directed trading platforms let you apply online in minutes and get approved in 1 or 2 business days. Once you’ve funded your account, you’re all set to start investing. But before you apply, make sure you’ve carefully compared trading platforms to find the right brokerage account for your needs.
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