Best Brokers for Day Trading in Canada

The best online brokerage for day trading stocks in Canada depends on your needs as a day trader.  That being said, we have found that Questrade is the best overall broker in Canada (read our full review) and is also the best broker for many day traders.  It depends on your situation.  We shall try to explain.

Day traders make their money (or lose it) by engaging in high-frequency trading and exploiting often tiny fluctuations in the markets.  They hold purchased stocks for very short periods of time and very seldom hold any stocks overnight.   So, one of the great enemies to their bottom line is overhead.  Brokerage commission fees can really hurt a day trader’s bottom line.

Depending on what sort of stocks you are trading, commission fees can be mitigated by using certain brokerages.  If you are trading stocks with a high purchase price in relatively low volume, Interactive Brokers is a great choice for your day trading.  They have a minimum commission of $1 per trade @ $0.005 per share and a maximum commission of 0.5% of the trade.  So, if you’re trading a stock with an expensive purchase price in smaller quantities, you can save a bundle.  For example: if you buy 202 shares of a stock that costs $495 per share (total transaction price $100,000), you will only spend $1.01 on commissions.  However, if you purchase 100,000 shares of a stock that costs $1 per share (total transaction price is again $100,000), you will pay $500!

If your fees will be higher with Interactive brokers, you should choose a broker that have a cap on commissions, like Questrade.  Questrade charges 1 cent per share with a maximum commission of $9.95 and a minimum of $4.95, so if you’re buying 100,000 shares at $1 each, you will only pay $9.95 for the trade.

So, what’s the commission solution? When I was dabbling in high frequency trading, I had an account at both Questrade and Interactive Brokers.  I used Questrade to reduce commissions that would be higher at IB and vice versa.

Research Tools, Market Data, and Trading Platforms for Day Traders

Both Questrade and IB have a plethora of options available in this department.  Interactive Brokers has a definite edge if you are planning on trading equities in markets outside of Canada or the United States, but their fees are also generally higher.  Questrade is generally the lower cost option in our experience.

 

Questrade Review A+

Questrade Review Score : A +

In our view, Questrade is the best Online Brokerage firm in Canada for most Canadians. In some situations it might be better to choose a different broker, but for 90% of Canadians it is the best choice.

Skip the Review and visit Questrade to sign up

I have been using this broker for nearly 10 years and I have always been happy with their services, but lately I have been happier than ever before.  I currently have a margin account, my RRSPs and a Tax Free Trading Account (TFSA).    I currently carry a large USD balance and I make adjustments to my portfolio fairly frequently (though not as often as I used to).

Setup

Questrade has the simplest sign-up process for any online brokerage in Canada.  It took me less than an hour when I helped a friend setup an account recently.  You only require $1000 to open an account, so Questrade is very accessible to extremely low net worth individuals

Pricing, Fees and Commissions.

Questrade has almost no reccuring fees in most situations and their commissions are quite low.   If you have a balance of $5000 CAD or more spread across all accounts, there is no annual or other fee for having an account.   If your balance is less than $5,000, you will pay a $20/quarter fee ($80 per annum).

Stock commissions range from $4.95 for most trades to a maximum of $9.95.  It’s based on the number of stocks involved in the trade.  The price is $4.95 if you’re trading 495 shares or less.  Every share over 495 costs one cent extra to trade to a maximum of $9.95.  Commissions on options are priced at $6.95 per trade plus 75 cents per contract traded.  You can purchase ETFs with no commission at all!  This is a great feature that most brokerages do not offer.

Types of Accounts & Account Features

Questrade offers a wide array of account types.  As mentioned earlier, you can open a TFSA, RRSPs and Margin accounts as well as accounts for FOREX.  All accounts allow USD balances with no extra fees so you can trade securities & options traded on the American exchanges with ease.

Questrade also offers a Robo trading ETF for hands-off investors that might be of interest to some investors.  This author is very hands on with his investments, so it’s not of much interest, but for some this is a great innovation that many other Canadian brokerages do not offer.

A new feature as of 2016 that Questrade has for offer is their IPO market.  It allows small investors access to IPOs (Initial Public Offerings).  This is an interesting innovation from Questrade, but it is unfortunately limited only to the relatively small Canadian IPO market.  But, to the best of our knowledge, no other Canadian broker offers such a feature, so this is yet another interesting way that Questrade is trying to innovate.

Trading Platform

Questrade offers several different trading platforms and market data packages that will satisfy investors with just about any needs.

Their default and free trading platform, IQ Web, works great for nearly any investor.  It’s simple yet powerful, it’s sleek and streamlined and it’s very easy to use.  For professional investors or investors who need more market data and more advanced research tools, there is IQ Elite.  This is a step up, but as I’ve written, most investors will have 100% of their needs met with the basic free service.

Final Score: A+

A Questrade account is extremely easy to set up, accessible to small investors, has a slick and easy to use interface.  You can’t go wrong!

 

Best Canadian Stock Brokers for Smartphone and Tablet users

We’re constantly reviewing or updating our broker reviews here at billionaire, and our reviews usually include mention of the quality of a broker’s smartphone or tablet app.   We realize that today, in 2017, many users will want to do all of their trades from their phone, so we decided to do a review that focuses entirely on smartphones and tablets.

If you’re looking for a broker overview and links to more general reviews of each online broker, look here

We will try to rank the Top 5 brokers by the quality and features of their smartphone app.  In the future, we will try to review all of the others as well

Our Top Pick: Questrade –  Questrade is possibly the most innovative of the Canadian discount online brokerage firms and their smartphone app reflects this.  It’s simple but fully featured, slick and easy to use.  Trading is an absolute delight on this platform.  You can sign up for Questrade and get $50 in free trading commissions here

Qtrade – not to be confused with Questrade (strange that we have two Canadian brokers with such a similar name), Qtrade’s smartphone/tablet app is also exemplary.  The app is nearly as good as Questrade’s, so there is virtually no difference.  Except we think Questrade is a better brokerage overall, so Questrade is probably a better choice.

Scotia iTrade – their online smartphone app is decent, but it’s lacking some of the polish and features shown in the Qtrade and Questrade apps

Virtual Brokers – Virtual brokers is a great overall brokerage for low net worth investors and we highly recommend it.  Their app for trading is quite good, but not nearly as easy to use as Questrade.  Fortunately it has been improving, so perhaps it will rank higher on the list in future versions

RBC Direct Investing – their smartphone app is quite a bit better than their website.  Unfortunately, this doesn’t say much as their website looks like it was made in 2003 and not updated since.   I really like RBC and I use them for business banking, but I can’t wholeheartedly recommend their trading app

Get $50 in free trades.

Note: we’ve looked at almost every smartphone trading app in Canada, but there are a couple we have yet to take a look at.  So, if we have a look and they’re better than any of those named in the above list, we will update this article to reflect our findings.

How to Play the Canadian Housing Bubble?

There is a large bubble in the Canadian housing market. Of this I am convinced and this article operates on that assumption, but how can you profit from it?

There have been countless articles written describing and proving this bubble’s existence. I might write a similar article eventually, but it feels like retreading. There is a bubble and it will pop eventually. Anyone who pretends to know when it will pop is a snake oil salesman (people like Garth Turner. Read the archives on his blog. He’s always pretty sure when the bubble will pop). That being said, there have been recent signs that indicate that it might happen soon. Sales are slowing and prices are declining in certain hot regions. However, other regions are seeing double digit year over year price increases, so it’s impossible to say.

But yes, there is a bubble. And when this bubble pops anyone who owns a house in Canada, but most especially in the superheated metropolitan markets, is going to lose a ton of equity (or go deep underwater). While there have been many articles written about the existence and the scope of the bubble, I can find few that offer any suggestions on how to profit from it. I have few ideas that I would like to share with you today

How to play the bubble depends largely on your situation. If you currently own a home in Canada – especially in Vancouver, the GTA, or a handful of other superheated markets – the best way to play the bubble is to sell it on the open market and rent a home. Pretty simple. You can permanently realize any gains you’ve experienced and use that money to again buy a house once the market has collapsed. Even if you own a home and you don’t currently have an equity in it, you should sell it and rent because you do not want to go underwater.

If you don’t own a home, another good bet is to invest in non-Canadian dollar denominated assets, like US stocks. If you’re concerned that the oil sector might rebound and the Canadian dollar will bounce back, be sure to invest in the US Oil sector. If the Oil market improves, these stocks will likely rise a the USD falls against the CAD, offsetting your losses.

This is a riskier one: short or buy put options against stocks that are closely related to the bubble. Two that come to mind are Genworth Financial, a mortgage company and Home Capital Group, Canada’s largest subprime lender. I would not recommend shorting Canada’s big 5 banks as they are mostly quite diversified with assets in the USA and many other income earning streams. And they have the ear of the federal government, so it’s never a good bet. However, I do believe they will lose a lot of value when the bubble pops. But I also believe the TSX as a whole will decline. For this reason, it might be a good play to buy an inverse TSX ETF like HIX. If you’re not sure which stocks to bet against, you can bet against Canadian equities as a whole.

In conclusion there are not really any slam-dunk plays to profit from the housing bubble unless you own a very overpriced home. What your goal should be is to avoid the plummet by diversifying your assets to the USA and/or elsewhere