Canadian Traders Guide
Forex trading in Canada is perfectly legal and has become increasingly popular over recent years, especially as technology has developed. It is however unregulated at a national level instead of being regulated on a region by region basis. Traders are free to choose any broker they like whether that be a local Canadian broker or one that offers its services to Canadian residents.
With so much choice, come many benefits. You can choose a broker based on several criteria. Having so many brokers on offer means that you can be more selective and find one that meets all, or most, of your requirements. Whether you are looking for good bonuses or just an excellent all-round experience you are sure to find the perfect broker for you.
How do you make sure that you find the right one, and how can you be sure that your money is safe? Well in addition to making sure you choose a broker with adequate regulation, you can also follow our recommendations and advice. We review and rate all of the Forex brokers that operate in Canada, providing you with enough information to make an informed decision.
In this article, you will learn:
- What features Forex brokers have to offer
- The taxes and fees that apply to Forex
- How we rate local and international brokers
Traders in Canada
Using a local Canadian broker is reassuring to many. The fact that they are a "homegrown" company, licensed and regulated in the country acts as a sort of assurance that the broker is reliable. That said there are many international brokers that offer their services in Canada. These are equally as beneficial to trade with. The key is to look out for some core factors including:
Welcome Bonuses And Deals
With a market that is becoming more and more saturated with both traders and brokers, they are all competing to get your attention. To do this effectively, many brokers offer competitive bonuses. These are usually a no deposit bonus so that you can try the site at no risk to yourself or a deposit bonus to ensure that you have more money to trade with.
If you are new to trading, then you are probably looking for some reassurance that your questions and queries can be answered effectively and efficiently. Excellent customer support is essential if you want to be able to get hold of the company. Look for a live chat assistant. Also scroll to the bottom of the website and find the "contact" button. What options do you have to get in touch with the broker?
If you, like most of the population, like to carry out your daily transactions on the move, then you will want a broker that offers a mobile solution. You will need to find a broker that provides either an app for Android and iOS or a website that is mobile responsive (delivers a mobile version of the website). To be honest at this stage of the game, it would be unlikely that you will find many Forex brokers that don't have a suitable mobile offering.
For many, the draw of Forex is trading in their currency vs another. You might feel more comfortable dealing in CAD/USD or similar pairs. Most brokers will offer the main currency pairs as standard but not less popular pairs like minors or exotics. If you would rather have the choice then you need to select a broker that offers an extensive and varied selection.
Broker Fees And Tax
Unlike most countries where Forex profits are treated and taxed as income, in Canada, it is subject to Capital Gains tax. Usually this means that 50% of the profit is taxed and the other 50% is not, however, this is subject to change as with any tax laws. If you are unsure then it is best to seek the advice of a financial expert who will be able to help. Usually you can print out a copy of your trading history and take it to an accountant who will have experience in this field.
With regards to fees, there are a number to consider. Many brokers charge a withdrawal fee. This is usually a small fee charged to administer the withdrawal. Often a few dollars, it is a fixed fee per transaction. The advice here is to keep drawdowns to a minimum rather than withdrawing daily.
The main fees will be deducted before you receive any profits from successful trades and will be the commission on your trades. In addition to this your payment provider may charge a transaction fee, and you may have to pay a currency conversion fee.
In many countries, Forex trading is overseen by one regulatory body. In Australia, this is ASIC, and in the UK it is the FCA. In Canada, however it is not that simple. There is no national regulatory body that oversees the industry; it is done on a regional basis. Here are the following regional regulatory authorities for Canada
While there are no specific national regulators, the Canadian Securities Administrators implemented registration rules for Forex trading in Canada in 2009. There are also other regulatory bodies such as the CFTC, the NFA, IIROC and the CIPF that regulate specific sectors of the financial markets.
When choosing a broker that is not licensed in Canada, it is wise to look at what licensing they do have. If you want to select a broker that is licensed look for CySEC, FCA, ASIC and MiFID. These usually indicate a well-regulated broker. If you are unsure, we offer a comprehensive list of recommended brokers.
There are many international brokers that offer their services in Canada.
How we Recommend Brokers
Our job is to make your Forex trading experience a much easier one. It can take hours to trawl through the internet assessing the various Forex brokers and selecting the right one. That's why we do it for you. Our team of financial and trading experts, review the different Canadian, and international, brokers on several criteria.
They look at the overall performance of a Forex broker and not just one or two aspects. They test the functionality of the platform and if the broker offers an excellent mobile trading experience. They also look at the assets offered, the welcome bonuses and deals and the payouts. They check for licensing and regulation and that the broker is committed to providing an excellent, reliable service.
Once they have all of this information, they compile a comprehensive review of each broker and score them on the different aspects. We are committed to ensuring that our information is accurate and up to date and that it assists you when selecting the right broker for you. You can be confident that we only put our name to the best and that the shortlist that we provide will make your decision much more straightforward.
Select those that best fit your requirements, visit the sites, get a feel for each broker and then make your final decision. Finally, all that is left to do is enjoy your trading experience.
Is Forex trading in Canada legal and safe?
While Canadian brokers are regulated according to the region that they are based and operating in, there is no national regulatory body. As there are no restrictions, trading is perfectly legal and above board.
Do I need to pay fees and taxes on my profits?
Forex profits in Canada are subject to capital gains tax as opposed to income tax. Generally, this is charged on 50% of the profit. You are advised to consult a professional who will be able to help you with your tax return.
Can I test brokers before trading with real money?
Most Forex brokers offer a demo account to allow them to practise trading on a virtual platform. This isn't a live trading environment, so it lets you get used to the various functions.
Is it easy to make deposits and withdrawals?
If you have access to a credit or debit card or any other method of electronic payment, then it is simple to make deposits. Withdrawals are processed back to the source of your deposit.
Can I trade using my mobile or tablet device?
You will find that most brokers have an app or a mobile-friendly website. Remember you will also need a mobile data connection to trade freely on the move.
Contributing to the website since 2012 we are one of many consultancy projects Samuel works on. With 38 years of experience in finance, insurance and foreign exchange his combined knowledge makes him an effective operator.