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Back in the day, investors looking to trade on the stock market would have to visit their stock brokerage to request a trade. Now, investors can make their own trades on their own time thanks to the advent of online stock brokerages. With a platform available through the internet, traders can buy and sell stocks on the spot without having to make any trade requests from a human broker.
What Is An Online Broker?
An online broker is one that investors interact with completely over the internet as opposed to in-person with a human broker or advisor. Online brokers offer similar resources that human brokers provide, with the major difference being the digital interface between investors and trading. With these types of platforms, investors can be more hands-on with their trading and take a DIY approach.
Investors use the online platform portal provided by their online broker to buy and sell, set parameters for trades, and establish stops as needed, much like what a human broker would do. And instead of speaking to a broker about trades and investments, investors will decide which stocks to buy and sell and will request trades themselves with the assistance of educational tools and materials that are made available to them.
Investors who trade with online brokers simply sign up for the trading platform and are then charged according to their trading volume, currency exchange, and inactivity levels.
New to investing? Check out our investing guide for beginners.
Best Online Brokers In Canada
These days, there are several online brokers available to investors. In this article, we’ll round up our top picks for the best online brokers in Canada.
|Online Broker||Commission||Minimum Investment|
|Questrade||$0.01 per share for stocks (minimum of $4.95 and maximum cap of $9.95 per trade)Free to purchase ETFs||$1,000|
|BMO Investor Line SelfDirected||2.5% of principal value to $35 + 6¢ (for Canadian exchanges)||$0|
|TD Direct Investing||$9.99 flat fee per trade$7 per trade for active investors||$0|
|Qtrade||$8.95 per trade$6.95 for young investors and those making at least 150 trades per quarter||$0|
Perhaps one of the better-known online brokers in Canada is Questrade. It’s also the largest online broker in Canada, with an impressive $9 billion in assets currently being managed by the firm.
Questrade offers a simplistic platform for investors to trade on, and offers a variety of assets to add to investor portfolios, including:
The online platform boasts low fees, which are categorized based on specific pricing structures. And if you’re a novice trader, you can start off with a Basic Account that is free, and includes Canadian and US level 1 snap quotes, and one-click real-time data. Otherwise, fees range from $19.95 to $89.95 a month, depending on what types of features you’re looking for.
You can get started trading with Questrade with as little as $1,000, after which you can invest in RRSPs, RESPs, TFSAs, LIRAs, margin accounts, corporate, forex, and CFDs and can take advantage of automatic deposits to keep your investments humming.
- No annual fees
- $1,000 minimum investment
- Types of accounts: RRSP, RESP, TFSA, margin accounts, LIRA, corporate, forex, CFDs
- Automatic deposits
- No transfer fees
- Web and app access
- Excellent customer service
- Trading Fees: Basic: $0.01 per share (minimum $4.95 to maximum $9.95 per trade for stocks), Enhanced: $19.95/month, Advanced: $89.95/month.
BMO InvestorLine Self-Directed
BMO InvestorLine offers Canadian investors different online investment paths, one of which is its BMO InvestorLine Self-Directed product. This discount brokerage account is geared toward self-directed investors who want to have a hand in their investments rather than handing everything over to an investment advisor to take the reins.
BMO InvestorLine is aimed at investors who have the know-how and some experience in trading and have the confidence needed to make their own decisions without the need for a financial advisor to make investment selections for them. It offers a user-friendly platform that’s simple to use and navigate, as well as a plethora of analysis options and handy features. Investors can quickly and easily see their portfolios at a glance and get a clear idea of what their investment performance history is like.
Investors investing with BMO InvestorLine Self-Directed will be charged a flat fee of $9.95 per trade, which includes ECN fees that many other trading platforms charged separately for. There is also an additional annual fee of $100 for registered accounts with a balance of less than $25,000 (or $50 for RESPs with less than $25,000). Fees are waived after the $25,000 balance mark.
For balances less than $25,000 for non-registered accounts, there is a quarterly fee of $25.
Investors can invest in:
BMO InvestorLine Self-Directed Features
- adviceDirect to provide investors with investing recommendations and advice
- $0 to open an account
- $9.95 flat fee per trade
- Stay up-to-date with alerts
- Track your performance
- Choose from several accounts
TD Direct Investing
TD has joined some of Canada’s biggest banks to offer an online trading portal for Canadian investors. The platform provides a myriad of educational tools and materials to help novice investors get started and more experienced investors make more from their investments.
The platform’s interface is very user friendly and allows you to customize news events to help you quickly scan all market updates related to the companies you have in your portfolio. Traders who are interested in trading equities in a non-registered account can take advantage of the gains versus losses chart, which allows for quick and easy handling of tax preparation, plus tax-loss harvesting strategies to keep more money in your pocket come tax time.
While a cost-effective approach to investing, TD Direct Investing fees are a little pricier compared to other online brokerages at $9.99 per trade and an additional $1.25 per contract for options. If you’re an active trader, your rate drops down to $7 per trade as a flat fee, saving you nearly $3 per trade.
Accounts you can invest in include:
- Cash accounts
- Margin accounts
TD Direct Investing Features
- No minimum investment
- Video educational series
- Daily live Master Class workshops
- Weekly free, live interactive training sessions
- $9.99 per trade
- Active trader discount of $7 per trade for more than 150 trades per quarter
Once known as Credential Direct, Qtrade is a great online discount brokerage that offers a user-friendly trading platform for investors on all parts of the investing spectrum. They offer competitive trading commissions at $8.75 per trade, which decreases to $6.95 for investors making 150 or more trades per quarter, or for young investors between the ages of 18 to 30. Investors can trade mutual funds and ETFs (from a list of 100) for free.
Investors will have a variety of investing and educational tools and materials available to them to help make better trading decisions, as well as excellent customer support when advice or recommendations are needed.
The trading platform can be accessed on desktop, laptop, or via mobile device to provide access to your portfolio, get instant quotes, buy and sell, use stop orders, set parameters, and follow markets on the go. You’ll have quick access to markets for stocks, bonds, mutual funds, ETFs, options, GICs, and more.
- No minimum amount to open an account
- $8.95 fee per trade ($6.95 for young or frequent traders)
- Real-time quotes
- Market news
- Educational and trading tools
- Customized reports
- Portfolio analysis
Perhaps one of the better online trading platforms for young investors or those who are just getting started is Wealthsimple, which comes with zero trading fees and offers a wide variety of stocks and ETFs, both from Canada and US. There’s no cap on the number of trades that can be made, and there’s no minimum deposit amount required to open an account. For these reasons, Wealthsimple is quite possibly the most cost-effective online trading broker in Canada.
There is a currency conversion fee, however, of 1.5% on every US stock and ETF trade.
Unlike most other online brokers that allow investors to trade on desktop, Wealthsimple is a mobile-only platform, so all trades are made via your mobile device. Considering this, the analysis tools are not complex or detailed as other platforms where investors have a larger screen to use.
For more experienced investors who want the details that typically compete with other trading platforms, this might not be ideal. But for those who appreciate simplicity, Wealthsimple may be a better option.
Investors can take advantage of socially responsible investing options to invest with companies that match their ethics, as well as tax-loss harvesting to hedge against paying more taxes than required. Wealthsimple clients will also have unlimited access to real-life investment experts when financial advice is needed.
- No minimum amount to open an account
- No trading fees
- Tax-loss harvesting
- Portfolio rebalancing
- Automatic deposits
- Fractional shares
- Socially responsible investing (SRI)
How Do Online Brokers Differ From Traditional Brokers?
There are a few ways that online brokers are different from traditional face-to-face brokers, including the following:
- Interface. While traditional trading involves direct interaction between investors and brokers, online brokers allow investors to make their trades entirely online or via mobile apps to make trades.
- Fees. Online brokers are typically much more affordable compared to traditional brokers, who typically charge significant fees per transaction, along with a percentage of overall profits.
- Control. Trading online gives investors the chance to have complete control of their investment portfolios.
- Speed of trading. Trades can be executed right away during trading hours with an online broker, as opposed to trading through a traditional broker, who must be notified of a request to buy or sell a stock, then make their move based on that notification.
- Educational tools. Online brokers offer a variety of tools for education and research at no additional charge.
Find out if you should choose a human advisor or a robo-advisor.
Features to Consider When Choosing an Online Broker
There are a few important things to consider when choosing an online broker, including the following.
An important feature to consider is the costs associated with the trading platform you are considering using. Take into consideration the types of investments you plan to make, how frequently you will be trading, any possible periods of inactivity, and currency conversion, which all come with a cost. Some brokers charge a percentage of each trade, while others charge a flat fee. Be sure to weigh the costs of each broker after taking your trading activity into consideration.
Different brokerages will have their own minimum account balance requirements, some of which may be a few thousand dollars. Consider how much you will have to start investing when doing your homework on online brokers and make sure your investment amount isn’t lower than the minimum amount required.
Since all your trading will be done on a digital platform, you’ll want to make sure the interface is user-friendly. Check out the platform to see how easy trading is, what types of tools are available, and how in-depth the information is before choosing an online broker.
You’ll be making all the trading decisions on your own, so you may want to get up to speed on trading before you invest your first dollar. Online brokers typically offer their own library of educational resources and tools to their clients, so check out the resources available to make sure they’re robust enough to help you trade with confidence.
Ideally, the online broker you work with will be insured with the Canadian Investor Protection Fund (CIPF) or other recognized insurers that will insure your invested funds if the broker ever goes belly-up.
Should You Use an Online Broker?
Generally speaking, an online broker may be a great option if you meet the following criteria:
- You have some investing knowledge. Since you have total control over your investments and are the one making all the important decisions, you should be comfortable with trading on your own and have some knowledge and experience doing so. Online brokers are designed to give investors the reins when it comes to their trades.
- You’re emotionally ready for market volatility. Stock markets are known for their volatility from time to time, often without any signs of what’s to come. You should be prepared – both financially and emotionally – to deal with these periods of volatility when trading on an online platform.
Online brokers are becoming increasingly sophisticated, providing traders with state-of-the-art interfaces and helpful tools to make trading as easy as ever. And with their low fee structure and minimum account balance requirements, trading with an online platform makes investing more affordable and accessible for investors, particularly those who are new to the game.
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