Dive deeper: Best stock trading apps in Canada
Best day trading platforms in Canada
Learn how to start day trading and find the best platform for day trading in Canada.
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.
The best day trading platforms and apps in Canada
Summary of the best day trading platforms in Canada
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 | $0 (up to $50,000 CAD or $25,000 USD) | 1.5% | $0 |
| Qtrade | $0 | $0 | $0 + $0.75 per contract | N/A | N/A | $0 per quarter |
| Moomoo | $1.49/stock | USD$0.99/stock | US stocks and ETFs: USD$0.99/stock (min. US$1.99 per trade) | free withdrawals for both EFTs and 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/yr |
What is day trading?
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.
What is the best day trading platform in Canada?
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.
Features of the best day trading platforms in Canada
Fast trade execution
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.
Low commissions
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.
Tradeable assets
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 data
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.
Advanced charting tools
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.
Advanced order types for risk management
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.
User-friendly interface
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.
Customer support
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?
How to choose the best day trading platform for you
Before you can find the best platform for day trading in Canada, you need to ask yourself a few questions:
- What assets and markets will I be trading?
- What day trading strategies will I use?
- What is my risk tolerance?
- How much money will I be trading with?
- Will I need a margin account?
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.
How to sign up for a day trading platform
If you want to sign up and start day trading in Canada, here’s what you need to do:
- Choose a brokerage. Compare day trading platforms to find one that’s right for you.
- Sign up. Visit the brokerage’s website and click on the link to sign up for an account.
- Complete an online application. Fill out an online application with your personal information, contact details and SIN.
- Provide proof of ID. Upload your driver’s licence or passport to verify your identity.
- Fund your account. Deposit money from your bank account into your day trading account.
- Start trading. You can practice trading with a paper trading account if you want or start placing real trades with a cash or margin account.
Dive deeper: Best Canadian stocks
How to start day trading
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.
Related: Best brokerage signup bonuses
Day trading strategies
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.
Scalping
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 trading
Momentum traders take advantage of price trends. They buy securities that are rising in price and sell assets that are trending downwards.
Contrarian trading
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 trading
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.
News trading
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.
Day trading rules in Canada
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.
Does pattern day trading exist 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 profitable?
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.
What are the risks of day trading?
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.
Transaction costs
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.
Trading on margin
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.
Volatility
Trading on volatile markets means there’s a risk of the market moving rapidly against you. This brings the potential for substantial losses.
Neglecting risk management
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.
Letting emotions into it
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.
Tax consequences
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.
Strategies to minimize risk with day trading
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.
Restrict your trade amounts
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.
Diversify
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.
Stop-loss orders
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.
Trailing stop orders
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.
Can you practice day trading?
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
Pros and cons of day trading platforms
Pros
- Low fees. The best day trading platforms have low brokerage fees or support commission-free trading. Many also offer discounted fees for active traders.
- Customizable. Experienced traders can customize online, desktop and mobile trading interfaces to suit their preferences and trading style.
- Risk management. The best day trading platforms allow you to use advanced order types to help minimize losses and manage risk.
- Advanced tools. Top platforms provide advanced charting tools and technical indicators to help you identify and execute trading opportunities.
- Short-term gains. Unlike traditional investing that focuses on long-term growth, day trading provides the potential to profit in the short-term, regardless of whether markets are rising or falling.
Cons
- High risk. Day trading is complicated, stressful and highly risky, so it’s not suitable for most people.
- Not all platforms are suitable. Some trading platforms are designed to offer simple access to stock markets for new investors, so they lack the advanced tools that day traders require.
- Fees apply. From trading commissions to currency conversion costs and account maintenance fees, make sure you’re aware of all the fees and charges that apply to your day trading account.
- Leverage. While trading with a margin account provides the potential for increased returns, there’s also a risk of higher losses.
Bottom line
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.
FAQs about the best day trading platforms in Canada
Sources
Important information: Powered by Finder.com. This information is general in nature and is no substitute for professional advice. It does not take into account your personal situation. This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, 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 most investors. You do not own or have any interest in the underlying asset. Capital is at risk, including the risk of losing more than the amount originally put in, market volatility and liquidity risks. Past performance is no guarantee of future results. Tax on profits may apply. Consider the Product Disclosure Statement and Target Market Determination for the product on the provider's website. Consider your own circumstances, including whether you can afford to take the high risk of losing your money and possess the relevant experience and knowledge. We recommend that you obtain independent advice from a suitably licensed financial advisor before making any trades.
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