Skip to main content

How to become a day trader in Canada?

Even though a majority of investors feel that day trading isn’t the right option for them. It is mainly because day trading profits are hard to come by comparatively. However, successful trades can let you enjoy large profits with your one-day bets only.

Therefore, day trading has become a tempting opportunity for various investors to make money. It is because what would be better than buying just a few hot stocks, waiting for some hours, and then selling them to make huge profits.

However, to enjoy more profits than losses in day trading, you must know how to become a day trader in Canada.

Recommended Brokers For Canadian Day Traders

Forex Brokers Min. Deposit Platforms Rating Secure Link
1 FXCC
$100
MT4, MT4 Mobile
MT4 MultiTerminal
4.9/5
Visit Site
Best New Canadian Broker
2 Fusion Markets
$100
MT4, MT5
Mobile app, DupliTrade
4.8/5
Visit Site
Best Broker for Beginners
3 BlackBull Markets
$200
MT4, MT5
VPS, API, Mobile app
4.7/5
Visit Site
True ECN Trading Broker
4 easyMarkets
$100
Web platform, MT4
Mobile app
4.6/5
Visit Site
Top Trading Apps
5 Avatrade
$100
AvaTradeGO
Web, Desktop, MT4, MT5
4.6/5
Visit Site
Most Popular Canadian Broker

A comprehensive guide on how to become a day trader in Canada

Day traders engage with the market actively. However, when it comes to knowing how to become a day trader in Canada, things can be a bit different here. Well, if you are looking for how to day trade in Canada, don’t look further. It is because here we have brought everything you need to know about how to become a day trader in Canada.

how to become a Canadian day trader

So, here we go:

Learn about the fundamentals of day trading and how it works

Day trading is a type of trading that refers to holding stocks or any other investments for one trading day only. Different types of accounts are available for day traders in Canada. These include margin account and cash account.

Even more, there are different lucrative market options as well to day trade in Canada. These options commonly include:

  1. Binary options
  2. Stocks
  3. Commodities
  4. Cryptocurrencies
  5. Index funds, etc.

However, whenever it’s about to become a day trader in Canada, you must understand how these types of accounts and markets will work for you.

Along with that, learning about the fundamental terminologies of day trading is also important. This will help you to day trade like a pro with ease.

Useful day trading strategies

When it’s about day trading in Canada, different types of day trading strategies are available to choose from. It isn’t wise to simply pick and go with any day trading strategy you come across. This will make you unable to tackle the challenges of day trading if your chosen strategy isn’t suitable.

Instead, it’s important to learn and test these strategies if you want to gain an edge as a day trader. Common day trading strategies you can choose include:

  1. Trading zones
  2. Scalping
  3. Swing trading
  4. Arbitrage trading
  5. A simple exit strategy of day trading
  6. Utilizing news
  7. Arbitrage trading.

Testing and sticking to the right day trading strategy religiously will let you reap the best results.

Choose the best platforms for day trade in Canada

When it’s about choosing the best day trading brokers or platforms in day trading, be wise. Not all brokers work the same. Therefore, you can’t blindly choose anyone to start trading. Instead, you have to perform your due diligence before choosing any day trading broker. Understand interest rate, min and max requirements of trade, and other similar aspects. Don’t forget to keep reliability, support, and quality of service in mind as well.

Considering all of these things will let you choose the right day trading platform with ease.

Know the tax rules of day trading in Canada

Income tax rules for day trading in Canada are quite straightforward. Profits from intraday trading activities aren’t capital gains, these are business income, instead. It means profits here are subject to tax. While losses are tax-deductibles.

Learn about day trading margin rules

Day trading margin rules in Canada are less strict as compared to the United States. In the United States traders must have $25000 in their security account, according to pattern rule. Fortunately, people who want to day trade in Canada don’t need to worry about any such restriction. Anyone with less than $25000 in their account who wants to become a day trader can relax for that part. It means beginners with lower capital still buy and sell their preferred range of instruments with ease.

However, at some Canadian brokers, you need to follow SEC pattern rules for day trading. This is commonly to clear US securities exchange trades. Even more, for options intraday trading with US securities exchanges, you might be believed a pattern day trader within 5 days. If it happened, then you will have to adhere to the rule requiring $25000 in your trading account.

However, if you want to avoid this $25000 restriction, ensure to choose a broker that can keep you from US securities.

Get a day trading course in Canada

Even though learning basics and essential terminologies, you can start to experiment with day trading in Canada. However, if you want to grasp better profits and become a successful day trader. Then taking a day trading course in Canada can be a better option to consider.

A day trading course in Canada will not only let you learn about the basics and essential rules of day trading. Also, you will get to know more about the day trading market. Along with that, you can also learn different other essential aspects, such as:

  1. Price action analysis
  2. Technical analysis
  3. Risk and money management

Take time to develop and test a trading strategy

After learning about the essentials of day trading in Canada, it is always vital to take some time before stepping into the actual trading process. Utilize that time in knowing your market. Also, create and test different trading strategies on a demo account. Once you tested your strategy well. Finally, you are all set to deposit money in your account and start day trading.

Conclusion

Day trading is becoming increasingly popular in Canada. Overall, day trading seems to be pretty challenging especially when you don’t know how to perform it well. However, once you got to know the proper process and learn how to observe and analyze the market. Then you will have better chances to make more profits with day trading in Canada.