Forex Trading In Canada

Forex trading in Canada has grown in popularity in recent years. Now, multiple online brokers and platforms are available to Canadian traders. This guide will explain how to start forex trading in Canada for beginners, including the best mobile apps, accounts and any tax implications.

Top Forex Brokers in Canada 2020

Forex.com are a leading forex broker. Offering the largest range of currency pairs (80+) and some of the tightest spreads in the industry.
Trade over 70 pairs and keep trading costs to a minimum, with tight spreads or the lowest commissions with Fusion
Avatrade offer 50+ currency pairs and their spreads are some of the best among any broker. They are regulated across 5 continents.
AxiTrader offers competitive spreads on a large range of Forex and CFD markets, integrated into the MetaTrader 4 platform. FCA and ASIC regulated.
69.6% of retail investor accounts lose money when trading CFDs with this provider
Pepperstone offers spreads from 0.0 pips on the Razor account and have almost 61+ pairs available to trade. Lots start at 0.01.
Global brand offering exceptional execution, low deposit requirements and advanced charting and trading platform features.
Binary.com deliver advanced forex trading via the MetaTrader5 platform and 3 Account Types
Just2Trade offer hitech trading on stocks and options with some of the lowest prices in the industry
BDSwiss offer 250+ Shares, Indices, Forex, Commodities and Cryptocurrencies markets via CFDs. With spreads from 1 pip and an award winning app, they offer a great package.
A regulated bank, Saxobank offer CFD, Stocks and Forex trading on 35,000+ markets via the SaxoTrader Pro and SaxoTrader Go platforms
Trade 33 Forex pairs with spreads from 0.0 with the 'Zero' account. Prices quoted to 5 decimals places, and leverage up to 1:1000
CMC Markets is headquartered in London and listed on the LSE. They offer competitive spreads on a global range of assets.
New Forex broker Videforex can accept US clients and accounts can be funded in a range of cryptocurrencies. Payouts reach 95% per trade.
Zulutrade provide multiple automation and copy trading options across forex, indices, stocks, cryptocurrency and commodities markets
IB Boast a huge market share of global trading. With a minimum deposit of $10,000 however, they remain an option for larger traders only.
Show All Brokers ⇩

What Is Forex Trading In Canada?

FX traders in Canada look to profit from price movements in international currency markets. Enabling this are online brokers who provide access to the market through trading accounts and platforms, where users can undertake analysis and take positions.

Canadian Dollar

Forex investors in Canada usually sign up to brokerages that offer the Canadian dollar (CAD) as a currency. This can reduce trading costs and conversion fees.

The Canadian dollar is the 6th most traded currency and forms 2% of the global currency reserves held by banks. The biggest influence on the CAD is the domestic economy, which is driven largely by oil, gas, and mining export operations. With that in mind, forex traders should pay particular attention to the price of crude oil and gold, which directly impact the value of the CAD.

Is Forex Trading Illegal In Canada?

FX trading is, in fact, legal in Canada. However, the laws and regulations can appear complex. The IIROC (Investment Industry Regulatory Organization of Canada) is the national regulator. But each region also has its own local regulator.

The three provincial agencies that regulate forex in Canada are:

  • Toronto – Ontario Securities Commission
  • British Columbia – British Columbia Securities Commission
  • Montreal & Quebec – Autorité des Marchés Financiers

Licensing

Before you start forex trading in Canada, check the broker is licensed with the IIROC. To do this, look for confirmation in the risk disclosure found on the bottom of a broker’s website. Alternatively, search for a broker on the IIROC’s ‘Dealers We Regulate’ page. When a broker does not hold a license with the IIROC, each local regulator has the authority to decide whether a broker can operate within that area.

Note to start trading in Alberta, Canada, you must also qualify as an ‘accredited investor’. To do that, you need to satisfy at least one of the following:

  • Received a minimum income of $200,000 across the last two years
  • Hold at least $1,000,000 in financial investments
  • Hold at least $5,000,000 in property investments
  • Be a bank or financial institution

Leverage

Rule 100.2(d) limits leverage and margin levels to 50:1 when forex trading in Canada. This is the same limit applied in the US while in Europe currency leverage limits are 30:1.

A lower margin rate equates to a higher leverage ratio. For example, a 2% margin rate would work out as a leverage ratio of 50:1, allowing you to take a $50 position with a $1 margin. In contrast, a 3% margin equates to a 33:1 leverage ratio.

Brokers

Which broker to choose for forex trading in Canada requires careful consideration. The best brokers provide all the tools and security needed to operate effectively.

Traders can choose between providers based in Canada or offshore companies. The advantage of offshore providers is that they are usually regulated in multiple jurisdictions, bringing an added layer of trust. Still, make sure the broker you do choose is licensed with the IIROC. Your cash will then be secured up to $1 million should your broker go bankrupt.

When you register with a broker, IIROC’s ‘Know your Client Rule’ dictates they must verify a range of personal information, including:

  • Age
  • Identity
  • Occupation
  • Marital status
  • Number of dependents
  • Social Insurance Number
  • Source of account funds
  • Income & net worth
  • Risk tolerance
  • Investment objectives
  • Investment knowledge & experience
  • That neither yourself or family members are ‘politically exposed persons’

For further guidance on finding the best forex brokers, including reviews, see here.

Accounts

Forex trading accounts in Canada vary depending on the broker. But you’ll usually find at least one of the below available:

  • Micro or mini account – Good for beginners, a micro or mini account usually has lower minimum deposit requirements, ranging from $100 to $250. They also allow traders to take smaller position sizes.
  • Standard account – For more experienced investors, a standard account usually comes with access to more tools and tradable assets. Minimum deposit requirements normally start between $500 and $1,000.
  • VIP account – For advanced traders wanting dedicated support and competitive fees, a VIP account can be a sensible option. But VIP accounts do normally require investments in the tens of thousands of Canadian dollars.

Platforms

Your forex platform is where you’ll spend the majority of your trading hours, so you’ll want the best tools available. FX platforms can be downloaded to desktop and mobile devices, or accessed through a browser.

Top forex platforms will have:

  • A user-friendly design – You’ll want a platform that’s straightforward to navigate, so managing trades and conducting analysis is a smooth experience.
  • Charts & graphs – Used to identify price trends, the best forex platforms have multiple charts and timeframes to choose from.
  • Indicators and signals – Technical indicators help you analyse price information. Popular platforms, such as MetaTrader 4 & 5, have upwards of 30 built-in indicators and dozens of custom indicators.
  • Costs – When forex trading in Canada, costs usually come in the form of spreads and commissions. Spreads can either be fixed or variable. Fixed spreads are normally higher, but they do mean traders are aware of the costs before they enter a trade. Variable spreads, on the other hand, are usually lower but can spike in periods of high market volatility.
  • Risk management features – In case the market moves dramatically, stop-loss and stop-limit orders can be used to limit losses and lock in profits.
  • Automated trading capabilities – Following preset criteria, algorithms will automatically enter and exit trades on your behalf.
  • Copy trading – Particularly useful for beginners, you can replicate the trades and strategies of other users.
  • Additional tools – Live news feeds help you keep pace with market triggers while economic calendars can help you plan for major financial events.
  • Customer support – Most FX brokers in Canada and offshore companies offer customer support via telephone or live chat.

MetaTrader 4 is the most popular online forex trading platform in Canada, delivering a breadth of tools while being easy-to-use and reliable. However, a growing number of providers are building their own proprietary platforms to meet the needs of their clients.

Overall, the most important thing is to find a platform you’re comfortable using.

Mobile Apps

The best forex trading apps in Canada allow users to seamlessly manage trade operations from a mobile device. Today most brokers offer a mobile app available on Android and Apple devices. Look for apps that offer a slick transition from your desktop computer, allowing you to run price and chart analysis, take positions, and monitor trades.

How To Start Forex Trading In Canada

For beginners learning forex trading in Canada, there’s a range of online resources and schools of thought available. For a formal learning environment, try training courses at an online academy. Alternatively, forums are a great trading prop, providing somewhere to interact with and get tips from experienced traders.

But arguably the greatest place to test your learning is on a demo account. Using historical and real-time data, you can test a strategy using virtual money. Once you’re confident, you can then upgrade to a real live account.

Taxes

Tax reporting on forex trading in Canada is straightforward. Any income or salary earned is subject to capital gains tax and forex traders should be prepared to pay up to 50% on profits. To make the annual tax filing process stress-free, keep a track of trades, profits, and losses throughout the year.

A professional tax advisor can help provide clarity if you’re unclear about your obligations, for example, if you also have other jobs that may impact what you owe.

For further guidance on taxes, see here.

Final Word

Forex trading in Canada is highly regulated with multiple trustworthy brokers and platforms available to retail investors. However, traders should be aware of the limits to leverage ratios and relatively high tax obligations. For beginners setting out, make the most of online training courses and demo accounts.

FAQ

What is forex trading in Canada?

Forex trading in Canada is popular among retail investors, with brokers connecting traders to international currency markets via an online platform. Traders can then analyse the markets through technical and fundamental analysis, and take positions.

Forex trading is legal in Canada. The IIROC (Investment Industry Regulatory Organization of Canada) oversees the forex industry on a national level, but local regulators also exert control. Canadian FX traders should check a broker is licensed with the IIROC before they open an account.

How do I start forex trading in Canada?

To start forex trading in Canada, shop around online for a domestic or offshore forex broker. Then get familiar with technical and fundamental market analysis. Demo accounts and online training courses are an excellent way to learn the basics and practice strategies.

How do I open a forex trading account in Canada?

To open a forex trading account, sign up on a broker’s website. You will need to submit basic personal information to satisfy several requirements, including to verify your identity, trading objectives, risk appetite, and source of capital. When you do register for a new account, check the broker is licensed with the IIROC (Investment Industry Regulatory Organization of Canada).

Can you make money forex trading in Canada?

Yes – you can generate income forex trading in Canada. However, most FX traders lose money. New traders should enter the forex market aware of the risks and should not invest more than they can afford to lose.