Best Day Trading Platforms in Canada

WOWA Simply Know Your Options

Day traders make many trades with a relatively thin profit margin. As a result, their profit and loss are much more dependent on the commission they pay for each trade compared with longer-term investors, who do a much smaller number of trades with a larger profit margin. On the other hand, day traders are the best customers for trading platforms as their large number of trades results in significant commissions. To attract day traders, most trading platforms offer lower prices for active trading. These considerations result in the best trading platform for day traders to possibly differ from best stock trading platform or best options trading platform.

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REDEFINE YOUR STOCK TRADING

Trusted By Over 21 Million Users Worldwide

$0 account fee and trade US stocks for up to 90% less

Get access to pre and post-market trading opportunities

Free real time stock quotes and free access to level 2 market data

Advanced charting and research tools

LEARN MORE

Day trading platforms in Canada are online platforms that allow individual traders to buy and sell stocks, options, and possibly commodities and other securities multiple times within a single day to take advantage of short-term price movements. Canadian traders can access various platforms that offer tools, data feeds, charting options, and order execution capabilities to facilitate day trading.

1. Real-Time Data and Charts: Successful day trading requires up-to-the-second market data and advanced charting tools. Many platforms provide real-time quotes, technical indicators, and other data visualization tools.

2. Order Execution Speed: Fast execution is crucial in day trading, where price changes happen rapidly. The best platforms ensure low latency and high-speed order execution to exploit price swings.

3. Low Commission Fees: Since day traders make frequent trades, commission fees can add up quickly. Many platforms offer competitive pricing, including zero-commission options for stocks and ETFs. Almost all charge fees for options, futures, or other advanced trading features.

4. Risk Management Tools: Day trading involves significant risk, so having access to stop-loss orders, trailing stops, and risk analytics is essential to protect against major losses.

5. Margin Accounts and Leverage: Many platforms offer margin accounts, allowing traders to borrow funds to trade larger positions than their available capital. However, this increases risk, and margin regulations are strictly governed by the Canadian Investment Regulatory Organization (CIRO).

moomoo: moomoo offers 100+ technical indicators, drawing tools and analysis tools to help you identify opportunities. Furthermore, zero account fees, together with moomoo’s competitive pricing of margin rates and forex fees, allow you to boost your returns. moomoo gives you access to Canadian stocks, Canadian ETFs, US stocks, US ETFs and US options.

Investors Edge: Investor’s Edge is part of CIBC banking group. Its services are priced more competitively than any of the other Big 5 Canadian banks. Using this platform allows you to use research done by CIBC analysts. Its services also seamlessly integrate with CIBC’s online banking services and user-friendly mobile app. Investors Edge gives you access to Stocks, ETFs, Options, Mutual funds, GICs, Fixed Income, Precious metals, IPOs, and Structured notes.

Interactive Brokers (IBKR): Known for its low margin rates and access to global markets, IBKR is a good option for day traders looking for extensive trading options and a professional-grade trading platform.

Questrade: Another choice for Canadian traders for its low fees, extensive research tools, and customizable trading interface. Questrade offers both web and desktop platforms with real-time data and advanced charting.

TD Direct Investing: This platform is backed by TD Bank and offers tools like real-time data, customizable workspaces, and advanced order types. It is also integrated with TD’s financial services, making it convenient for account holders.

Wealthsimple Trade: While more suited for beginner investors due to its simple interface and zero-commission stock trading, Wealthsimple Trade is gaining popularity among casual day traders in Canada.

Lightspeed Trading: Geared toward professional traders, Lightspeed offers high-speed execution, direct market access, and a range of tools for active traders, including detailed market analytics and algorithmic trading options.

• Pattern Day Trader Rule: Unlike the U.S., Canada does not have a strict Pattern Day Trader (PDT) rule. In the U.S., traders must maintain at least $25,000 in their accounts to engage in day trading. However, traders should still be mindful of margin requirements and leverage.

• CIRO Oversight: The CIRO regulates day trading in Canada, which sets margin requirements and governs trading rules. All platforms must comply with these standards.

• Volatility: Day traders navigate highly volatile markets, where prices can swing within minutes.

• Commissions and Fees: Although some platforms offer low or no fees, the cost of frequent trades can still add up, especially when trading less liquid assets like options or futures.

• Capital Loss: Day trading is risky and can result in significant losses, particularly for those using margin or leverage.

A stop-loss order is a type of order placed with a broker to buy or sell a security once it reaches a specified price, known as the stop price. Its primary purpose is to limit an investor’s potential loss on a security position by automatically triggering the sale or purchase of the security when the market price moves in an unfavourable direction.

How a Stop-Loss Order Works

1. For Long Positions (when you own a stock and want to prevent losses if the price drops):

   • You set a stop price below the current market price.
   • If the price falls to or below the stop price, the stop-loss order is activated, converting it into a market order. This results in selling the stock at the best available price, which could be at or near the stop price.

   Example:

   • You buy a stock at $50.
   • You set a stop-loss order at $45.
   • If the stock price drops to $45 or lower, the stop-loss triggers and the stock is sold at the market price (which could be $45 or slightly lower, depending on market conditions).

2. For Short Positions (when you’ve shorted a stock and want to prevent losses if the price rises):

   • You set a stop price above the current market price.
   • If the stock price rises to the stop price or higher, the stop-loss order is triggered, and a market order is executed to buy the stock back, limiting further losses.

Benefits of Stop-Loss Orders

• Limit Losses: Stop-loss orders help traders manage risk by automatically exiting a position if the price moves against them. This can prevent larger losses if the market continues to move in an unfavourable direction.

• Automated Risk Management: Once the stop-loss is set, the investor doesn’t need to continuously monitor the stock, as the system will automatically trigger the sale or purchase at the specified stop price.

• Protect Profits: In addition to protecting against losses, stop-loss orders can also be used to protect unrealized gains. Investors can adjust the stop price as the stock price rises to lock in profits.

Types of Stop-Loss Orders

1. Traditional Stop-Loss: Converts to a market order when the stop price is reached. While this guarantees execution, the actual price at which the trade is executed may differ from the stop price in fast-moving markets.

2. Stop-Limit Order: Unlike a traditional stop-loss, a stop-limit order sets both a stop price and a limit price. Once the stop price is reached, the order becomes a limit order rather than a market order. This means the trade will only execute at the limit price or better, but there’s a risk that the order won’t be filled if the market price moves past the limit price.

   Example:

   • You own a stock at $50 and set a stop price at $45 with a limit price of $44.
   • If the stock falls to $45, the stop-limit order triggers, but the stock will only sell at $44 or higher.
   • If the stock falls too quickly below $44, the order might not get filled, leaving you with the stock.

Limitations of Stop-Loss Orders

• Execution Price May Vary: For traditional stop-loss orders, the execution price may differ from the stop price, especially in volatile or fast-moving markets. The stock may decrease or exceed the stop price before filling the order, resulting in a larger-than-expected loss.

• Not Ideal for Short-Term Volatility: A temporary price fluctuation in markets with high volatility could trigger the stop-loss, and the stock could be sold even though the price recovers shortly after.

Example of a Stop-Loss in Practice

• You own 100 shares of a stock trading at $100.
• To limit your risk, you set a stop-loss at $90.
• If the stock price falls to $90, your stop-loss is triggered, and the stock is sold at or near $90, protecting you from further decline.

Stop-loss orders are commonly used to manage risk, reduce emotional decision-making, and automate the process of selling or buying at predefined levels.

A trailing stop is a type of stop-loss order that automatically adjusts as the price of a security moves in your favour, allowing you to lock in profits while limiting potential losses. Unlike a traditional stop-loss, which is set at a fixed price, a trailing stop follows the price of the asset by a specified percentage or dollar amount and only triggers if the price reverses by that amount.

How Trailing Stops Work

1. Initial Setup: You set a trailing stop by specifying a certain percentage or dollar amount below (for a long position) or above (for a short position) the current market price. For example, if you set a trailing stop of 5%, the stop price will always be 5% below the highest price the security reaches.

2. Price Movement in Your Favor: If the price of the security increases, the trailing stop will move up (or down for a short position) accordingly. For example, if the stock moves from $100 to $110 and you have a 5% trailing stop, the stop price will adjust from $95 to $104.50 (i.e., 5% below the new high of $110).

3. Price Movement Against You: If the security's price decreases, the trailing stop stays at its last adjusted level. If the price falls to or below the trailing stop level, it triggers a market order to sell (for long positions) or buy (for short positions), thus limiting further losses.

Example of a Trailing Stop

• Starting Price: You buy a stock at $100.

• Trailing Stop: You set a trailing stop at 5%.

• Price Increase: The stock rises to $120, and the trailing stop adjusts to $114 (5% below $120).

• Price Reversal: The stock falls to $114. At this point, the trailing stop triggers a market sell order, and the position is sold at or near $114.

• Outcome: You’ve locked in a $14 per share profit, even though the stock price didn't reach your original target.

Benefits of a Trailing Stop

• Locks in profits: As the price moves in your favour, the trailing stop adjusts to help capture gains while the stock rises.

• Limits risk: If the stock reverses direction, the trailing stop limits potential losses by triggering the stop order at the predetermined trailing distance.

• Automates the process: You don't need to adjust your stop-loss as the price fluctuates manually, reducing emotional decision-making.

Limitations

• Market volatility: In highly volatile markets, the trailing stop could trigger prematurely if the price moves erratically within a short period before recovering.

• Execution at the market: Once the stop is triggered, the order becomes a market order, which may lead to execution at a less favourable price than expected, especially in fast-moving or illiquid markets.

A trailing stop is particularly useful for momentum traders who want to let their profits run while protecting against significant downside risk.