Best Forex Brokers Canada 2021 – Public Finance International

With a growing number of forex broker services now available, it’s important to find the best forex broker in Canada that works for you.

Here is a detailed breakdown of the brokers in Canada based on platform-tools, currency pairs, and trading fees.

Read on to find out what you should consider when choosing the forex broker for your investment needs.

Best Forex Trading Platforms Canada 2021

Here are the top 10 best brokers for Forex Trading in Canada based on platform-tools, trading fees, and currency pairs.

Interactive Brokers

Interactive brokers have been tailor-made for advanced, active traders worldwide. 

Their trading platform is great for intermediate traders. 

Interactive Brokers is an incredibly competitive broker that offers a robust range of asset classes available in 125 markets globally.  Their market access is unparalleled and they offer a wide variety of tools to meet every need you could have. 

Interactive Brokers Logo

Interactive Brokers Logo

PROS

CONS

Amazing smart order router

Streaming data is only available on one device at a time

Robust range of asset classes available 

The smart order router is not available for IBKR Lite customers

Mutual Fund Replicator is available 

Great research tools

eToro

Founded in 2007, eToro is regulated in two tier-1 jurisdictions and one tier-2 jurisdiction. This makes it one of the safest brokers when trading CFDs or forex. 

This platform is great if you want to invest in social copy trading or cryptocurrencies. 

eToro is one of our favorite platforms because its web-based platform and mobile app are user-friendly. Their platforms are a good option for casual traders and beginners. 

A downside to eToro is that they tend to have higher fees when trading forex and CFDs so this is something to keep in mind. Their research material is also limited when compared to competitors. 

comparison etoro logo

comparison etoro logo

PROS

CONS

User-friendly web-based platform and mobile app

Customer Support

Offer trading in 15 cryptocurrencies

An amazing community of traders 

Great customer service

Plus500

Plus500 is a trademark of Plus500 Ltd and was founded in 2008. 

Plus500 is a great option for traders who want to expand and diversify their portfolios. They offer low trading costs and an easy-to-use platform which is great for beginners. 

Plus500 is regulated by the FCA in the UK which makes it a safe option for trading. It also offers negative balance protection and assured stop loss orders. 

A huge downside of Plus500 is that it is not available in the US. 

Plus500 Comparison

Plus500 Comparison

PROS

CONS

Offers over 2000 trading instruments

Sub-par customer support

User-friendly platforms

Not available in the US 

Regulated by FCA

Unable to pair the trading platform with other trading tools 

TD Ameritrade

TD Ameritrade is one of the largest online brokers globally. What sets them apart is that they interact with their customers and community via social media such as Twitter and Facebook. This greatly improves their customer service.

TD Ameritrade is great because it offers an amazing range of platforms that are easy to use. The platforms are available online and on mobile. They also offer the thinkorswim platform which caters to active traders. 

TD Ameritrade offers great educational content and is a good option for beginners.

TD Ameritrade Logo

TD Ameritrade Logo

PROS

CONS

Offer free research

Do not offer fractional shares

Zero commissions charged on stocks, options trading, and  ETFs 

Zero account minimums

Good customer support

Lightspeed

Lightspeed was founded in 2000 and was designed with active, high-volume traders in mind. 

They offer a plethora of platforms and these include Lightspeed Trader, Sterling VolTrader, EZ EMS, and Sterling Trader Pro. However, you should keep in mind that these platforms might have different fee structures. 

A downside of Lightspeed is that they have ridiculously high account minimums that range from $10,000 to $25,000. Their commission schedules are also tiered according to per-share and per-contract commissions which are charged depending on the trading volume.

Lightspeed Logo

Lightspeed Logo

PROS

CONS

Traders can route their own orders

High account minimums

Offer a fast order router

Not beginner-friendly 

Great customer service

e-Trade

e-Trade is another popular online broker. They have gained a reputation for their professional and easy-to-use platform. The platform appeals to both active traders, and beginners. Beginners can enjoy the vast amount of educational content available.

Like most trading brokers, e-Trade charges $0 commission fees for all stocks, options trading, and ETFs. 

Their trading platform includes a sleek, professional mobile trading app which is great for traders on the go. 

e-trade logo

e-trade logo

PROS

CONS

User-friendly trading tools

Their website can be difficult to navigate

Amazing customer support

Offer extensive research and educational content

Rich investment selection

Ninja Traders

Ninja Trades was founded in 2003 and has made a name for themselves for their excellent trading and charting tools. 

For traders with a funded account, the research and charting tools are available free of charge. Their platforms feature real-time analysis and customizable technical indicators. 

Ninja Traders offers their clients access to forex and futures markets. 

What makes them great is that they have partnered with huge brokerage firms like Interactive Brokers and TD Ameritrade. This partnership has allowed them to give their clients access to additional markets like options of futures, equities, and CDFs. 

Ninja Trader Logo

Ninja Trader Logo

PROS

CONS

Amazing charting and analysis tools 

A basic funded account is free but additional fees are required to access advanced features

e*Trader offers a plethora of third-party applications and platforms for their users to choose from

A supporting broker is required if you want to trade equities

Offer a paper trading account which is great for practicing and learning without risking cash

Great educational content

Forex Trading In Canada

All reliable and safe Canadian foreign exchange brokers are licensed and regulated by the Investment Industry Regulatory Organization of Canada (IIROC). On top of this, each provincial region in Canada also has its own local regulator.

According to rule 100.2(d), leverage and margin levels for forex trading are limited to 50:1 in Canada. This lets you take a $50 position with a $1 margin.

Forex profits are usually taxed as income in most countries, but profits made in Canada are taxed as capital gains. This means that 50% of your profit is taxed. You only have to report the amount of your annual net gain or loss if it is above $200. As with any tax laws, this may be subject to change. 

How To Start Trading Forex In Canada?

  1. Make sure you have access to a desktop or device that has a stable internet connection
  2. Choose a forex broker that suits your trading interests. Your broker must accept clients from Canada.
  3. Open a forex account with your chosen broker.
  4. Deposit funds into your forex account using any payment method accepted by your broker.

Forex Terms

Pip

Pip is an acronym for “price interest point” or “percentage in point”. This is the smallest price change that an exchange rate can make in the forex market. Most currency pairs will be priced to four decimal places with the pip change as the last decimal point.

Lot

Lots are the specific number of currency units that you buy or sell. This is a unit that measures a transaction amount. Orders are quoted in lots when you place orders on your trading platform.

Orders

You place a market order when you want to buy or sell at the best available market price. Orders are placed through your forex trading platform. 

Margin Calls

A margin call tells you when you need to deposit more money in your forex trading account. It also tells you when to close losing positions to free up more margin. 

Spread

A forex spread is the difference between the sell price and buy price when trading currencies. This is usually measured in pips. If a broker decides to widen their spread this means that the buyer will pay more and the seller will receive less. 

How To Pick a Forex Broker as a Canadian

Regulation 

All forex brokers should be registered with at least one financial regulating body. Canadian forex brokers are regulated by the Investment Industry Regulatory Organization of Canada (IIROC). Your brokers need to follow all the rules set by the IIROC.

Account Security 

It’s important to be aware of the security policies of your forex broker. Account security features help ensure that your forex account is protected from growing cyber threats. A good broker should make customer account security a priority.

Currency Pairs Offered 

A currency pair is two different currencies that are traded on a market. USD to EUR is the most commonly traded currency pair. The first listed currency, known as the base currency, is bought. The second listed currency, known as the quote currency, is then sold. 

Fees & Commission 

Stock brokers charge a wide range of trading and non-trading fees. You should be aware of all the fees that your broker charges in advance. It’s important to know how to determine the commission charges on all of your trades.

Rollover Interest 

Rollover interest is the difference between the interest rates of two traded currencies. This means that a position is held at the end of the trading day without the trader settling. Many positions are rolled over daily until they are settled.

Trading Platforms Supported 

A versatile and user-friendly trading platform makes a big difference to your forex trading experience. The best broker should offer access to premium platforms such as proprietary, MT4, MT5, or cTrader. Most brokers also offer their own platforms that come with unique features.

Leverage and Margin 

Leverage is when you use borrowed capital to make a trade or investment. While this might increase your potential return, it increases potential risk at the same time. High leverage generally leads to higher profits or higher loss. This depends on how the trade goes.

Margin risk is the risk that comes with achieving an expected margin. This is the probability that certain economic changes will negatively impact the expected profit margin.

Account Types

Some forex brokers offer different types of accounts to traders. You should be aware of which accounts your broker offers. There might be different trade fees and account minimums for different account types.

Micro or Mini Accounts: A micro account, also known as a mini account, is a type of account that allows smaller investors to access the forex market. This is designed for beginner forex traders and those who only trade in smaller volumes.

Retail Accounts: A retail trader is someone who trades their own money but does not trade for a living. Some brokers cater more for retail traders with lower fees and no minimum account balance.

VIP or Professional Accounts: A VIP forex account, also known as a professional account, is designed for traders who deposit large amounts and actively trade large volumes. These accounts offer custom-tailored services. Account-holders usually get charged lower trading fees and are offered more competitive trading costs. 

Demo Account Available

Demo accounts are offered by many online forex brokers. These are also known as paper trading accounts. This allows traders to invest in fake virtual money in real-time markets. This tool is especially useful for beginner forex traders.

Deposit Methods

Make sure you choose a broker platform that has a straightforward deposit process. Usually, investors simply need to login, enter their credit card information, and the funds are deposited within one business day. 

Other methods include bank wiring and transferring money from a digital wallet. Some brokers may offer different deposit options and charge different deposit fees.

Base Currency and the CAD 

If you’re a Canadian trader then you’ll want to look for a broker that offers currency pairs with CAD as the quoted currency. You should choose a Canadian broker that offers a selection of base currencies that you would be interested in trading. A good forex broker should make a wide selection of currency pairs available. 

Order Types 

Forex brokers should cover at least the basic forex order types. The following are the most common order types that each trader should be aware of.

Market orders are orders to instantly execute a trade at the current market price.

Pending orders are orders that are to be executed at a specific price at a later time. 

Limit orders are another important order type. You place a buy limit order to buy either at a specific price or lower. A sell limit order is placed to sell at a specific price or better. 

Stop orders are designed to prevent an order from being executed until the price reaches a specific price. 

Stop loss orders are a type of order that prevents additional losses if a price goes against you.

Trailing stop orders are a type of stop loss order that changes as the price fluctuates.

Mobile Trading 

A mobile trading platform is a mini version of a proper desktop trading platform. Trades are complete through an app on your smartphone. A broker that offers mobile trading is ideal if you’re looking for an easy way to access your accounts on-the-go.

Type of Brokers 

Market Makers are brokers that create and control the market prices for their clients. They often take the other side of a trade to fix prices.

Both Straight Through Processing (STP) and Electronic Communication Network (ECN) brokers don’t create market prices. They allow clients to trade at current market prices and simply connect two trading parties.

Education and Research Available 

Education resources are particularly important for new traders. These can include videos, forums, and how-to articles. 

A good online broker should provide a variety of market research. You must be aware of the growth prospects of a currency before investing in it. Access to thorough records of currencies will showcase its earnings and performance on the market.

Trading tools Available 

You should look for a brokerage that offers you enough tools for thorough security analysis. This includes charting tools, analyst ratings, and price alerts. 

Forex trading is often complex, so having a broker with the best forex trading tools could significantly improve your bottom line.

Customer Service 

A good forex broker should offer a helpful 24/7 customer support team. You should have easy access to the service staff at all times for urgent advice. 

Execution Speeds 

Order execution is when your broker completes a buy or sell order on your behalf. All your orders are sent through to your broker to be executed. Fast order execution speed is particularly important if you’re looking to day trade.

Hedging and Scalping

Scalping is a short-term trading strategy where you aim to make a profit by quickly closing a trade with tight pips. 

Hedging is another trading strategy that involves placing orders on both sides of a specific currency pair. If both a buy and a sell order are made, then a profit is guaranteed.

FAQ

Is Forex Trading Legal in Canada?

Forex trading is legal in Canada. It doesn’t have a national regulatory forum though. Forex trading in Canada is considered the same as trading in securities and derivatives. You need to be aware of the trading regulations in each province.

How Much Do I Need To Start Trading Forex?

Most forex brokers nowadays let you open an account with as little as $10. While it’s possible to start trading with as little as this, you will need around $100 to properly get started.

How Much Do Forex Traders Make a Day?

The amount of profit you make will depend on how much money you put into trading and how big your risk is. It’s possible to make anywhere from a 1% daily profit to a 100% daily profit. This will depend entirely on how good your trading strategies are. 

The more you want to make, the bigger your risks will have to be. You mustn’t invest any money that you aren’t prepared to lose.

Do Forex Traders Pay Tax In Canada?

Yes, Canadian forex traders do pay tax. If currency trading is part of your livelihood, the Canadian Revenue Agency (CRA) will treat your capital gains as taxable business income

What Is The Percentage Of Tax On Forex In Canada?

Forex profits are marked as Capital Gains tax in Canada. This usually means that 50% of your profit is taxed. You only have to report the amount of your net gain or loss for the year that is more than $200. 

This is subject to change, so it’s best to seek advice from a financial expert if you are unsure.

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