The Forex industry in Canada is controlled by different regulatory bodies, however, every broker wishing to participate in Forex trading must be regulated by IIROC (also known as Investment Industry Regulatory Organization of Canada). IIROC ensures that all financial activities that are related to the Forex industry are carried out in a fair manner, and all the participants have a safe and enjoyable experience.
With the seventh most powerful currency in the world, in terms of market share volume, the Canadian dollar sits comfortably among them. Because of its volume in the international market, its currency has earned a place among the major currencies, and it is revered by many Forex traders.
People wishing to start trading in Canada, have the privilege of using some of the most popular payment methods that are considered fast and trustworthy. You can either make deposits and withdrawals with e-wallets such as Skrill and Neteller, or debit/credit cards, along with PayPal with most Canadian Forex brokers.
Trading is taxable in the country and traders will have to pay for their Forex profits. All the clients that have profits are subject to capital gains tax – meaning that they are taxed at 50% of their marginal rate.
The strength of the Canadian dollar and the overall economy of the country will not make you a rich Forex trader unless you choose the appropriate brokerage company and learn how to trade Forex yourself. The quality of the broker decides a lot starting from your trading costs to how much profit you can generate. That is why you should aim at discovering the best of the best for trading currency pairs on an efficient platform and in a convenient trading environment. To make your task easier, we present you to the list of regulated Forex brokers in Canada.
5$
CySEC, FCA, ASIC
30$, 50%+20%
30:1
2009
MT4, MT5, WebTrader
$100
CySEC, CBI, FSA, FFAJ, BVI FSC, FSCA, FSRA
1:400
2006
MT4, MT5, WebTrader, AvaTradeGO
USD 5,000
FINMA, FCA, ASIC, FSA, MAS, AFM
N/A
1:30
1992
SaxoTraderGo, SaxoTraderPro
$5
SVGFSA, FCA, DFSA, FSCA, FSA
From 30% to 100%
1:1000
2010
MT4, MT5
15
CySEC
30%
1:500
2015
MT4, WebTrader
$250
FSCA
1:200
2012
MT4, WebTrader
100$
FCA
N/A
30:1
2008
Custom
$10
Risk Warning: YOUR CAPITAL MIGHT BE AT RISK
N/A
1:1000
2013
Proprietary
10 USD
FCA, CySEC, FSA
N/A
1:Unlimited
2008
MT4, MT5, WebTerminal
$10
N/A
N/A
1:500
2019
MT4, custom
$10
1:500
MT4
250$
FCA, NFA
N/A
200:1
1999
MT4
$25
ASIC, CySEC, FSA, BVI
50%
1:400
2001
WebTrader, MT4, TradingView
100
FCA, CySEC, DIFC, CIMA
N/A
500:1
1977
MT4, MT5
$100 AUD
ASIC
N/A
500:1
2005
WebTrader, MT4, MT5, IRESS
AUD$200
ASIC, SCB, CMA, CySEC, FCA, BaFin and DFSA
N/A
1:400
2010
MT4, MT5, cTrader, TradingView
$50
N/A
N/A
1:500
2015
MT4
1 USD
ASIC, FCA
10 USD
1:500
2005
MT4, MT5, WebTrader
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Canada has a multitude of agencies dedicated to ensuring stability and proper regulation within the financial sector. For traders who are contemplating using FX brokers Canada, they should be aware of these agencies, and they should find out which brokers are regulated by which institutions. It is recommended to avoid Forex brokers who are not regulated. Only top Canadian FX brokers will go the extra mile to obtain licensing from a regulatory body, as this ensures that they are maintaining certain standards of quality and integrity in their interactions with clients. And if you are a person planning to do business in the financial sector, those two qualities are extremely important.
The main regulatory bodies within the country are as follows:
There are these many agencies across Canada because the country does not possess a centralized regulatory system, which allows all relevant financial regulations to be governed by one central body. Instead, each of these institutions has differing responsibilities with regard to regulating the various financial firms within the country. This means that traders must be vigilant of where exactly their Forex brokers are located within the country, as brokers located in different territories may have slightly different regulations. In the world of trading, knowledge is power, so in order to be fully secure when conducting their transactions traders should be fully aware of the type of regulations that their brokers are held to.
Trade with an IFSC-Regulated broker – XM
As we already mentioned, traders in Canada are subject to Capital Gains Tax which is up to 50% of your marginal rate. You might be wondering how exactly is tax calculated, and in order to make things clearer for you, let’s take an example. Generally, clients are taxed at somewhere around 43% (marginal tax rate) of their capital gain into 50%. Here is the formula:
Capital Gain Tax= Capital Gain x 50% x 43%. Be aware that the marginal rate might be different under various circumstances.
This tax is not applied to the first $200 in gains and losses, meaning that if you are not a long-time trader and don’t intend to make profits, then there is a high chance that you will be free from tax. Considering the fact that profits made from Forex trading are in most cases huge, this is a great possibility for governments to generate big revenues – there are not a lot of places in the world where Forex trading is tax-free.
Canadian Dollar is one of the major currencies, supported by the Bank of Canada. This means that you will most probably be able to find Forex brokers offering accounts/currency pairs in CAD.
At this moment, the CAD is the 7th most traded currency in the world, meaning that demand for it is quite high. CAD/USD currency pair is the one that you will most frequently come across within the foreign exchange market since it represents two of the most stable economies around the globe. Considering the fact that this currency pair is very liquid, traders lose less money in normal market conditions. Apart from having a strong currency, Canada has enjoyed very strong growth over the last few years with its smart fiscal policy. Having a strong economy is one of the first reasons why the majority of investors choose the country as their main trading destination.
Currently, there is no cap on leverage for Canada Forex brokers, however, it does not mean that you should not be careful with it. The industry’s standard for leverage ratio is somewhere between 1:200 and 1:300, and we advise you to choose platforms that do not have anything above that, especially if they are unregulated.
Generally, the majority of reputable financial regulatory bodies choose to restrict brokerage companies from high leverages, as they can easily be the reason for losing all your funds – that way, customers are protected. Specific platforms will have the maximum leverage indicated on their main webpage, and we advise you to check them and evaluate all the risks before starting your trading journey.
The Forex market in Canada is quite big, that’s why Canadians have the possibility of using a variety of payment methods available to them. No matter if you are a credit/debit card, or e-wallet user, you will most definitely find an option that suits your interests the best. The majority of Canada FX brokers offer Skrill, Neteller, Visa, and Mastercard. However, the most popular option still remains PayPal due to the fact that it’s very easy to use and offers comfortable trading features.
It is important to note that each payment system you will come across, has different specifications and requirements. For instance, some may have commission fees (mostly, brokers cover fees for you, but there’s still a chance), some may have a longer waiting period for transactions. When it comes to Paypal, you will never have to wait for more than 1 working day, while debit/credit cards can take up to 5, and wire transfer to 10 working days in total. So, be wise before choosing a specific deposit/withdrawal method for your favorite Canada FX broker.
Trading is inherently risky, not only in Canada but around the world generally. However, trading with a broker that you cannot trust to have the highest security makes it even ten times riskier. As a trader, it is imperative to be certain that your Forex Canada broker has trustworthy security measures. One way to do that is to use a broker that offers extra protection for your transactions and data. This means employing the use of methods such as SSL encryption to protect your financial information and having a privacy policy to protect your personal information (from a legal avenue). The top Canadian brokers licensed by IIROC also use two-factor authentication to prevent the likelihood of unauthorized transactions being done on their clients’ accounts.
One of the essentials when choosing a good Forex broker is being able to identify the broker with the best spread and commission offered. Now, for those who are seasoned Forex traders, this may seem obvious, but with the excitement of learning about the possibilities of trading Forex, a new trader may completely bypass this essential portion of choosing a broker. And if they do this, they may very well end up with a company with very high spreads, and or commissions that eat into the profits that they may make.
Another thing that Canadian Forex traders consider when choosing a broker, is probably at the same time one of the more important things, not necessarily for the trading itself, but for everything else. That is the customer support service offered by their brokers. The truth is that as Forex traders, we rely on the regulated Forex brokers in Canada a lot, not only to process our trading orders but also for many other transactions as well. Think about it, most brokers require you to confirm your identity in some form, before you are able to open an official account with them. This means that you have to provide them with sensitive information about yourself, whether that may be your passport information, or driver’s license, and your bank statement, or utility bill with your name and address. When uploading these documents, you are placing a large degree of trust in the broker that they have integrity (that they won’t sell your information to identity thieves and other unscrupulous persons) and that they have the security capacity to protect your information.
If you plan to start trading with top Forex brokers in Canada, we advise you to read our guide for beginners and make sure that you know all the basics and are ready to start. We can also offer some trading strategies that will help you plan & make better trading decisions.
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