Brokerage Options for Canadians

This guide is for traders looking for brokers that allow for quick executions, hotkeys, and direct access routing.  It has been assembled with assistance from a Warrior Trading member. (Thanks, Ashton!)

Please scroll or click the links below for resources and information on brokerages available to Canadian traders looking to trade US securities:

• PDT Rule: Does it apply to Canadian traders?
• Interactive Brokers
  • Pros
  • Cons
  • Suggestions to Optimize Your Experience
  • Base data subscriptions for day trading stocks
• Questrade
  • Pros
  • Cons
• TD Direct
• Trade Zero
• Taxes: Exchanging Currency and Norbert’s Gambit
• Platforms for Swing, Long-Trend, or Investment Traders

Warrior Trading is not a financial advisor and is not a brokerage. Please check directly with the broker for confirmation or with further questions, as their rules and policies are liable to change. We recommend reaching out to a CPA for advice or assistance with understanding how taxes may affect your trading and withdrawals. Please click here to view our full terms.

PDT Rule: Does it apply to Canadian traders?

The short answer: no!

Typically, US trading regulations at US brokerages apply to all traders regardless of their country of origin (and therefore many international traders are still subject to the PDT rule). However, many US brokerages do not accept Canadian traders at all, and so brokerage options can be limited for traders from Canada looking to trade the US markets. Several US brokerages do have offices specific to Canadian clients and, in these instances, the PDT rule does not apply to Canadians trading US securities. The PDT rule also does not apply when Canadian traders trade US securities through a Canadian brokerage.

Individual brokerages will require a certain amount of capital in order to access margin or leverage in your trading. This differs between brokerages so traders should confirm with brokers what their requirements are; however, this is separate from the PDT regulation.

Interactive Brokers

Full Warrior Trading review: https://www.warriortrading.com/interactive-brokers-review-warrior-trading/

Pros

• Wide variety of financial instruments available to trade
• TWS software is feature-rich (although somewhat complicated)
• Customizable hot keys in TWS (see Cons section for more on this)
• Inexpensive base live data fees with many add-ons
• Commissions are lowest among Canadian brokers (see Cons section for more on this)
• Can integrate with third-party direct access software (DAS Trader Pro, Sterling Trader Pro)
• Mobile and online account and trading platforms are convenient and easy to use
• Shares available to short for free in many cases, without the need to locate
• Foreign exchange is built-in and simple, with competitive rates, so funding an account in Canadian dollars and then changing to US dollars is simple and fast 
• Free monthly account withdrawal (limit of 1 per month)

Cons

• TWS hot keys do not always work
• Commissions can be difficult to understand
• Live data subscriptions can be difficult to understand

Suggestions to Optimize Your Experience

• If you find the TWS experience to be less than ideal for your situation, connecting a third-party direct access software like DAS (https://www.warriortrading.com/das-trader-review/) or Sterling (https://www.warriortrading.com/sterling-trader-review/) can help
• Interactive Brokers has some experienced traders on their customer service staff that can offer suggestions for how to optimize your experience with them – be sure to call in and pick the brain of one of the experienced customer service members
• You can add charting from a third-party like TradingView (https://www.warriortrading.com/tradingview-review-2017/) for historical data plotting, since DAS and Interactive Brokers are both limited to 5 years.

Base data subscriptions for day trading stocks

Traders will typically need the three base network data subscriptions to get most US stock data for day trading. The three networks and their costs as of June 2021, are:

You can find more options for data feeds on the Interactive Brokers website here: https://www.interactivebrokers.ca/en/index.php?f=14193

The bottom line: For only $4.50 USD per month, Interactive Brokers offers a good ability for day trading US stocks from Canada. Utilizing their exchange feature avoids paying an additional exchange fee on every trade placed and saves time by not having to utilize Norbert’s Gambit to exchange your cash and then waiting for the trades to settle out. The ability to attach DAS or Sterling can make this an ideal choice for all types of day trading, especially the faster, momentum-style trades that have quick entries and exits with very short holding times.

Questrade

Full Warrior Trading Review: https://www.warriortrading.com/questrade-broker-review/

Pros

• IQ Edge software offers a lot of features and is highly customizable
• Great customer service
• Commissions and fees are clear and easy to understand
• Data feed fees are easy to understand
• Mobile trading interface is easy to use and well organized
• Commissions cap at a low rate if using high share amounts, making commissions very low for large share volumes per trade
• Data fees are partially and then 100% rebatable based on trading volume 
• Free monthly account withdrawal

Cons

• Hot keys are extremely limited and are pre-set by Questrade
• Commissions can be higher for lower share amounts per trade
• IQ Edge can lag, especially at the open
• Required to either pay an extra fee for transactions to pass from Canadian to US dollars and back, or you need to perform Norbert’s Gambit to exchange Canadian funds to US funds for trading US securities

Base data subscriptions for day trading stocks

Questrade makes it very easy to select the data packages you need. First, select whether you want Self-Directed or Active Trader pricing, and then your data options come up. Self-Directed allows traders to subscribe to just Enhanced Level 1 data (both US and Canadian exchanges) for $19.95 CAD per month; this options is not available with the Active Trader pricing.

With either Self-Directed or Active Trader pricing, the Advanced US Data Package is what many day traders will want to go for, as it offers Level 1 and Level 2 live data for US stocks while also providing Level 1 data for Canadian stocks, for a monthly price of $89.95 USD per month.

With any data package, you can get all or part of your fees reimbursed through active trading. Check the Questrade website for up to date information here: https://www.questrade.com/pricing

The bottom line: Questrade is a robust platform that is great for all types of trading, especially swing, trend and longer term trades. Due to the market open lag and the extremely limited hot key availability, it is less ideal for momentum-style day trading, but fine for day trading styles that do not require hot keys for entries and exits.  

TD Direct

As of March 1, 2021, TD's thinkorswim is no longer available to new Canadian subscribers and is only available to customers who were already with TD Think or Swim before that date. However, TD’s Web Direct Investing platform is available to Canadian subscribers. You can learn more here: https://www.td.com/ca/en/investing/direct-investing/

Trade Zero

Trade Zero recently opened its doors to Canadians again. You can see our review of their platform here: 

https://www.warriortrading.com/trade-zero-broker-review-how-it-matches-up/

and their new website for Canadians here: https://www.tradezero.ca/

Taxes: Exchanging Currency and Norbert’s Gambit

A potential area of confusion is when it comes to handling taxes on trading income in Canada, when that money has been earned on US stocks, in US dollars. It is best to reach out to an accountant to decide how best to account for this in your particular case. This article from the Chartered Professional Accountants of BC can be a good place to start expanding your understanding: https://www.bccpa.ca/news-events/latest-news/2019/capital-gains-101-how-to-calculate-transactions-in-foreign-currency/

Something to be very aware of is the added cost of funding an account with Canadian dollars and then exchanging that money to US dollars to trade US securities on US exchanges. When you fund an account with CAD and the keep it that way, the broker typically will charge the exchange rate on every trade execution that occurs in a different currency than your cash balance, plus a fee.

Warrior Trading recommends that persons desiring to trade or invest in securities do so cautiously and only in consultation with their professional, licensed and qualified financial, legal, tax, estate planning and accounting advisors. View our full terms here.

To minimize fees, some Canadian traders utilize a currency conversion technique called Norbert's Gambit. This article from Medium.com explains how this works with the common ETF DLR. The Interactive Brokers platform has a helpful feature that allows CAD-funded accounts to be converted to USD by signing into the web portal and selecting the menu option to Convert Currency. Input how much CAD you want to convert to USD, execute, and it is done through an FX (Foreign Exchange) trade. 

To withdraw your money from USD to CAD, you will have to decide what is most advantageous to you at that point. A CPA can help you with this decision.

Platforms for Swing, Long-Trend, or Investment Traders

The following can be worth exploring for traders who do not hold for less than 5 - 15 minutes at a time and do not require hot keys for entries and exits. 

• Brokers to consider: Interactive Brokers with Tiered Commission or Questrade with Advanced US Market Data and Active Trader Pricing, or Wealthsimple for long-term investment accounts
• Software to consider: TWS or DAS with Interactive Brokers, or IQ Edge with Questrade
• Charting platforms to consider: TradingView for historical data with Interactive Brokers or IQ Edge with Questrade

For daily or longer timeframes, Wealthsimple can be fine for trade executions. Questrade IQ Edge is adequate for historical data going back 10 years (on a weekly timeframe only) and can be supplemented with TradingView for older trading data. 

Reminder: please check directly with the broker for confirmation or with further questions, as their rules and policies are liable to change.