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How to day trade in Canada


Learn how to day trade in Canada using IFC Markets as your forex trading platform.

Volatility and price fluctuations in the forex markets can make day trading risky and complex for novice traders. However, if executed well, day trades can be profitable.

Taking advantage of price fluctuations and volatility requires having a well-defined trading strategy. In this article, Benzinga looks at how to day trade in Canada, including the best times, benefits, and tax implications for day traders. Let’s dive!

What is Day Trading?

Day trading is a trading strategy in which a trader buys and sells securities on the same day. In forex trading, day traders do not hold positions overnight. Instead, they try to capitalize on short-term price movements and volatility in currency pairs to make gains. Before the market closes, they exit and close all positions.

What you need to start Day Trading Forex in Canada

Canada has many platforms available for forex trading, and here is what you need to get started as a day trader.

Forex Brokerage Account

The only way to trade forex in Canada is to open a forex brokerage platform. When choosing a day trading platform, specific criteria should guide your decisions. Factors such as licenses, spreads, payment choices, withdrawal options, and types of investment accounts are some of the features to evaluate.

Research tools

Forex is a very volatile and complicated market. Before choosing a currency pair or trading strategy, you need to do some research. Using research tools such as charting software, technical indicators, volatility calculators and an economic calendar can help guide your trading decisions.

Knowledge of Forex trading strategies

You would also need knowledge about forex day trading strategies to be a day trader. Although it may come from reading trading books, the best way to gain knowledge is to get your hands dirty. You can study the market in depth and test strategies with paper trading. Paper trading offers you a virtual account to test your approach.

Risk management strategies

Risk management is an essential skill if you want to succeed as a forex trader. One way to manage risk in day trading is to use stop-loss or take-profit orders. This practice limits your losses or locks in your profits when the price reaches a predetermined level.

How to Trade Forex in Canada

Forex day trading in Canada is relatively easy to get started. After opening your brokerage account, trading platform, and researching the currency pairs to trade, you can then place your trades. Price quotes are accompanied by a spread between the bid price and the ask price. They are usually measured in pips, which stands for percentage points – the smallest unit of measurement for currency movements. Take note of pips and spreads before placing a trade as they can determine the extent of your profit or loss. Keeping a forex trading journal can help you track and monitor traders to better develop a day trading strategy.

Best time for day-to-day trading in Canada

It may be best to trade at certain times of the day – when activity is high due to an increase in trading volume, this can create more opportunities for day traders to capitalize on volatility and price fluctuations. price. This usually happens when two markets overlap – one market closes and another opens. Given this, the most active time in forex trading is when the New York and London markets overlap (8 am to 12 noon EST).

Canada day trading rules

Day trading in Canada is affected by the superficial loss rule. A superficial loss occurs when you sell a security at a loss and buy it back within 30 days. This rule states that when a superficial loss occurs, you cannot claim a capital loss. This means that you will not be able to deduct this loss from your income taxes.

Tax Implications of Day Trading Forex in Canada

Depending on whether you are an individual or a business, forex day trading in Canada has tax implications. Let’s look at some of the day trading taxes that can affect forex traders.

Income taxes

Day traders registered as sole proprietors or corporations must pay income tax, as earnings are considered business income. Income tax from day trading must be reported on your personal or corporate income tax return. If the Canada Revenue Agency (CRA) considers your day trading income to be business income, you may be exempt from capital gains tax.

Capital gains tax

If you are a retail trader, capital gains on day trading activities have a tax rate of 50% at your marginal tax rate.

Benefits of Day Trading Forex in Canada

Several advantages come with day trading forex in Canada.

  • No risk overnight: The forex market is a 24-hour market with trading activity around the clock. Keeping positions open overnight can expose you to price fluctuations while you sleep. Since day traders close their trading positions before the market closes, they are not exposed to overnight risks. As such, they don’t have to worry about an overnight news event that they can’t react to and that could lead to losses.
  • Better control of your time: With day trading, you have better control over your time. You set your schedule and trade whenever you want. You can also use trading bots to do the trading for you, freeing up your time for other activities.
  • Earnings can be accumulated faster: You may be able to use the money you made the day before to trade a bigger position the next day and potentially make more money. Your previous profits – if you have any – can be used to increase your profits faster.

Take advantage of opportunities as a day trader

Whether you’re new or old, forex day trading can be complicated and risky. However, the Canadian forex market presents opportunities that day traders can capitalize on, provided you understand how the market works and have a solid trading strategy.

Frequently Asked Questions


How much money do you need to day trade in Canada?


There is no minimum amount required to commit transactions of the day in Canada. Some trading platforms accept as little as $50 to redeem.


What is the 30 day trading rule in Canada?


On 30-transactions of the day rule means traders claiming a capital loss from trading a security cannot trade that same security within 30 days of the sale.


Do Forex Traders Pay Taxes in Canada?


Yes, forex traders in Canada pay taxes.



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