Are you looking for the best forex brokers Canada has to offer in 2020?
If the answer is yes, our expert team can help you.
We have compiled a list of the best 5 options for you to choose a forex broker. Canada can sometimes be a challenging location when it comes to your choice of brokers.
Many forex trading brokers in Canada offer limited trading capability, while some do not offer any service at all to traders. Luckily, some of the best forex brokers Canada can provide, have been found by our review team.
These top brokers will provide a full range of trading capabilities for you to get the most out of the forex market in Canada. As expected with any major forex broker, Canada-based brokers which we have listed offer some of the most competitive fees, and access to the best trading platforms.
This combines with providing the widest range of markets and trading products for you to choose from. All of this should be of great help to you in cultivating a successful career as a forex trader with some of the top forex trading brokers in Canada.
(This post is part of the best forex brokers series)
Table of contents
Is Forex Trading legal in Canada?
This is a question that many people ask, regardless of which country they are forex trading in. With Canada, while there are some points we will outline here. Forex trading in general is legal. The forex market in Canada is regulated by the IIROC (Investment Industry Regulatory Organization of Canada). The IIROC are the national regulator, though each region of Canada has their own local regulator which is where things can get complex and we will take a look at that below.
For this reason, Canadian customers can face some challenges getting accepted by brokers especially if that broker is not IIROC regulated. In fact, when a broker is not IIROC regulated, each regional regulation has the power to decide whether or not a broker should be allowed to offer its services within the area.
Is Forex Trading legal in Alberta?
Things get a little tricky as we mentioned, in Alberta. Forex trading is legal, but you must qualify as an “accredited investor” whether or not the broker is IIROC regulated. This is something similar to the qualification as a professional trader in Europe and you must satisfy at least one of the following conditions:
- Qualify as a bank or any other financial institution
- Have a net income of at least $200.000 in the past 2 years
- Have at least $1.000.000 in your financial portfolio
- Have at least $5.000.000 invested in properties
If you can satisfy one of these criteria, then you will have no problem being classified as an accredited investor in Alberta.
How to trade forex in Canada
Things go back to normal in this respect. The steps for starting in forex trading within Canada are generally the same as in another country. You should be sure to provide the following:
- Proof of identity typically in the form of your passport is best.
- Proof of residence through a utility bill or bank statement within the last 3 months is usually best.
From there, you will be free to fund and trade on your fully verified account.
Top 10 Forex Brokers Canada Listing for 2020
Here’s our list of the best Canadian forex brokers.
Canadian trader? Here’s what to look for in a forex broker
As a Canadian forex trader, there are indeed some things to watch out for that may be OK in some other countries when trading with a top forex broker.
Binary options trading for example, is illegal in Canada. Oppositely, spread betting is in fact legal for Canadian traders. Derivative products like CFDs, while they are not legal with the neighbors in the USA, are legal to trade in Canada. Cryptocurrency trading is also legal in Canada and very much enjoyed by Canadian traders.
Restrictions on leverage and other trading conditions are also somewhat lenaint in Canada. Leverage can generally reach up to 50:1, and while negative balance protection is not mandatory as it is in Europe, it is still generally offered by top brokers along with the use of segregated bank accounts.
With those points noted, here are a few tips to follow when choosing your forex broker in Canada:
1. Look for forex brokers regulated in Canada
This point goes for every place, you should always be on the lookout for the best regulation. The IIROC is the national regulatory body and very trusted in Canada, so much so in fact, that brokers offering their services in every Canadian province must be regulated by them. This is a great thing to make sure you have in place to improve trust.
2. Try to look for brokers that offer CAD currency
We all want to avoid fees as much as possible. This means trying to choose a broker that facilitates CAD deposits and base currency. It will save you on commissions and fees from both the broker and your bank. Luckily, most of the Canadian forex brokers already facilitate this.
3. First time trading? Look for Negative Balance Protection
Negative balance protection basically can prevent you from losing more than you have in your account. This could happen in rare cases where the market is volatile and particularly if you are new to trading. So, even though it is not mandatory in Canada, it makes sense for you to find and choose a broker that offers this protection for your own benefit.
How to verify if a forex broker is regulated in Canada
One of the last steps before trading and once you have found a broker that ticks all the boxes for you, is to verify their regulation. This is simple to complete and means heading over to the IIROC official website, and checking the IIROC Register there using the company name. This name you can typically find at the bottom of your brokers homepage.
Is forex trading taxable in Canada?
The last question is are your forex trading earnings taxable in Canada. Yes, they are. You will have to pay capital gains tax on any profits in this respect. The typical tax on these earnings is also known to be quite high in Canada so you should expect to pay around 50%.
We are not professional tax advisors, thus we strongly suggest you contacting local authorities if you don’t know how to manage this aspect