Best Online Forex Brokers In Canada


Filippo Ucchino | Updated: 27-04-2021 16:48 IST | Created: 27-04-2021 16:48 IST
Best Online Forex Brokers In Canada
Representative image. Image Credit: ANI

Despite the turbulent times, everyone has experienced since the outbreak of COVID-19, global markets still present many opportunities for investment and growth. On the one hand, markets can be unstable and subject to dramatic swings. On the other, they have remained stable enough for investors to feel safe and optimistic about the future. 

Furthermore, due to lockdown measures, and the time we’ve all spent at home, online trading has boomed like never before. It’s unlikely this trend will stop. On the contrary, it’s only the beginning. 

One type of market we all understand is the Forex Market, or FX (foreign exchange market), and how currencies are valued against one another. We all understand how this can work in our favor when traveling to another country at certain times, but it can also work in our advantage as an investment strategy. 

In the past year alone, the difference between US Dollars and the Canadian Dollar has fluctuated from 1USD=1.43CAD (April 5th, 2020) to 1USD=1.25 (April 5th, 2021). That one simple transaction involved more than 10% in change. On a larger scale, that’s enough to make a big difference in anyone’s annual bottom line. 

According to InvestinGoal, in Canada, trading currencies is not only easy with the right online brokers but also perfectly legal and well regulated. Here’s how to get started. 

How It Works

The concept itself is easy to grasp. We use money for everything, each country (or regions like the EU) has its own unique currency. Global trade takes place everywhere and all the time, and in order for entities from different countries to trade, currencies must be exchanged. 

As a private investor, you will buy and sell currencies in order to profit from the difference. If between two points in time, for example, I trade 1000USD for 800EUR (roughly 1.25USD to 1EUR), and after one month the Euro has risen in value to 1EUR=1.30USD and I trade back to USD, I’d have 1040USD. Not bad growth all things considered, instead of letting money simply sit around.

More skilled investors can make such transactions with greater margins of profit, in smaller windows of time, with higher frequency, and a wider variety of currencies. That would require the use of a broker.

Forex Brokers In Canada

First, we must be clear- we are only interested in regulated brokers. In Canada, regulation is done by the IIROC (Investment Industry Regulatory Organization of Canada). That being said, certain regions may restrict certain brokers in particular ways, mostly in and by Alberta. 

A broker does not have to be IIROC regulated in Canada to be a good option, as there are other regulatory bodies that are present regionally. You’d want to consult this article regarding the best online forex brokers Canada to find the specific details that might concern your region, but for the most part, it is only Alberta that differs from the rest. Now, let’s examine the simple steps of getting started with forex trading.

To get started, you will only need two fundamental things. One is proof of identity, such as a driver’s license or passport (widely used documents). The second is proof of residence, which is much simpler than it sounds: any formal letter from the past 3 months which includes your name and address will be accepted as proof (bank statements, for example, are perfect for this). 

Before choosing a broker though, keep an eye out for some important things that might concern you. First, check that your broker supports the use of Canadian Dollars in a way that won’t require you to pay fees and commissions when trading with CAD, as this would eat away at your profit margins. 

Secondly, especially as a first-time investor, make sure your broker has negative balance protection- while we hope you won’t be losing all your money, as you can imagine when you learn to ride a bike you’re likely to fall a few times. With negative balance protection, you will only lose the money that you choose to risk, and not more. In a manner of speaking, it prevents the said bicycle from falling off the side of a cliff, an option for the safer road instead.

Best Brokers To Choose From

Look out for these brokers when deciding which to choose from:

  • AvaTrade- a household name in the trading community. Avatrade is IIROC regulated, offers negative balance protection and the special AvaProtection service that puts a stop to sudden and great losses. A minimum deposit of $100 is required to start. Their trading platforms include Metatrader 4, DupliTrade, and the company's own Avatrade. Alberta residents must be accredited investors to use this broker.
  • Forex.com- This company has been around long enough to gain respect and loyalty from traders worldwide. They are IIROC regulated. Their minimum deposit is only $50, however like many brokers, they are restricted in Alberta.
  • Vantage FX- this broker is not IIROC regulated. However, as we’ve said before, this does not necessarily exclude them from being considered among top brokers. The minimum deposit starts at $200, and traders will have access to both the Metatrader 4 and Metatrader 5 platforms. They are restricted both in Alberta and British Columbia.
  • Oanda- IIROC regulated, Oanda is considered a top choice for 2021. It includes educational and training resources for beginning investors that will help them understand the forex market better.  This broker has no minimum deposit. In Alberta, only Accredited investors can join.
  • CMC Markets-  a true market veteran, CMC has been active since 1989. They are IIROC regulated and require no minimum deposit. They also include training resources. This broker is Alberta restricted as well.

These are only a handful of top brokers to choose from, and their services include more services and differences than we discussed.

Why Forex?

What is the biggest trading market in the world, the one with the largest volume of trade and constant movement? The stock market? The commodities market? Physical assets? To find an answer, think about what you actually need to invest in the first place. 

It’s money, and money is denominated by currency. 

Thus, the Forex Market (foreign exchange market, also known as the FX market), is the largest market in the world. In a sense, where everything starts and ends. This fundamental fact gives forex a unique set of circumstances that makes it different from other markets, as well as easy to comprehend for many beginning investors.

(Filippo Ucchino, Head of InvestinGoal.com, is an online trader, finance and fintech passionate. Devdiscourse's journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)

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