CFD trading in Canada is entirely legal and exceptionally well-regulated. There are plenty of great broker options available to you and in this guide, we’re going to tell you everything you need to know about this popular investment opportunity.
We’ll start by explaining the licensing and regulation that applies to CFD trading in Canada. Then we’ll suggest a few steps you might want to take before you risk investing any money. We’ll also cover how we test the brokers we are reviewing and give you some tips on how to find the ideal CFD broker for you.
We would like to think that our guide to finding the best CFD broker in Canada will be useful for many different types of readers, irrespective of their level of CFD trading knowledge. Those who are complete beginners will learn plenty and even seasoned CFD traders are sure to find a few useful pointers along the way.
There is also value in reading our guide for traders in other countries too. For example, even if you are already engaged with CFD trading in New Zealand or actively seeking the best CFD broker in Malaysia, much of the advice we will give you for finding your ideal CFD broker is just as relevant, regardless of your location in the world.
Licensing and the regulatory guidelines for CFD trading in Canada are put in place by the Investment Industry Regulatory Organisation of Canada (IIROC). Most legitimate brokers display their licensing credentials on their own websites, but you can also find out more from the IIROC website by using the link to the ‘Dealers we regulate’ section, where all licensed CFD brokers are listed.
In addition, IIROC is overseen by The Financial Institutions Supervisory Committee (FISC), which ensures that all licensed CFD brokers implement suitable recompense for traders in the event that the brokerage should fail. This ensures that traders’ funds are protected up to $1 million.
Lastly, at provincial level, the Ontario Securities Commission, the British Columbia Securities Commission and the Autorité des Marchés Financiers (for Quebec), set further regulations for CFD trading in their respective provinces. If you intend to trade CFDs in Canada, it is your responsibility to ensure compliance with the regulations appropriate to your location.
In most countries, profits made from trading CFDs are taxable and although the exact rules for online CFD trading in Canada will be different to those applied to CFD trading in Germany, for instance, the implication is the same. You are required to provide detailed records of all CFD trading activity to the appropriate tax authority and present a profit and loss analysis at the end of each fiscal year.
You will see throughout this guide that certain subjects come up repeatedly. If that is the case, then it’s because they are absolutely vital composites which when combined, make the best CFD broker in Canada.
As we explained in the previous section, you are likely to find that most brokers display their licences on their websites, but it’s always worth double-checking that the licence is still current on the IIROC site too.
Nobody enjoys reading through the T&Cs that every broker in Canada is required to make available to traders. However, it’s definitely a better option than getting an unpleasant surprise because you didn’t.
Make sure you fully understand all of the terminology used on the broker’s site and its implications, especially where it concerns anything that could have an adverse effect on your financial position.
CFD brokers are responsible for determining their own fee structures and there are several ways they might be applied to each trade. Some offer different account levels, each with its own limits and fees. It’s an area you should always explore carefully before committing. available too.
Most brokers have demo platforms available and the majority offer unlimited free use. However, there are some brokers who only offer a trial period and a few who even charge a monthly fee.
Although there are many different factors we cover in every broker review, to be added to our recommended CFD broker list for Canada, there are certain areas where brokers must be up to scratch and others where we allow some compromises. In practice, each of those areas contains a subset of questions we answer and rate against – the more boxes we can tick, the better the overall rating.
We are looking for a well-designed and highly functional website in this section. So, we consider things like page loading speed, ease of navigation, logical menu options and all links should be working. On some level we do consider aesthetics as well, but feel that is more a matter of personal choice than a necessity.
There is often a good deal of variation between different brokers. Some will have several different platforms available, especially if they offer a range of financial instruments. Others may have a single bespoke platform that’s designed to be multi-purpose. Whichever the options, we will ensure that they perform as expected and assess their suitability for different levels of trading experience.
As CFDs rely on company stocks as their underlying asset, theoretically the choices available are infinite. However, in reality, you’ll find that availability is not consistent between different brokers. We found that some CFD brokers take the global stock approach, others place more emphasis on Canadian stocks and in some cases, offer preferential fees for trading them.
CFD trading times correspond with the hours and days that global stock exchanges are live. In essence, this extends from Sunday evening, through to Friday evening. The best CFD brokers in Canada will therefore provide customer support throughout the entire period that trading is taking place. Ideally, we would hope to find at least one immediate contact method, either a phone number, or a live chat facility. It’s also ideal if there is an email address available for more complex enquiries. Naturally, we seek timely and professional responses as well.
Assuming that you have first checked out your broker’s licensing credentials and are also satisfied with the security protocols in place, there are other factors to consider that will help you track down the best online trading platform, as well as enhancing your CFD trading experience.
You will almost certainly find that not all brokers are equal. What one trader considers to be the best online CFD broker in Canada might have no appeal for another. There are two main points you should consider here. The first defining factor will be your level of experience and the second concerns your anticipated trading volume.
Whilst some trading platforms are ideal for beginners, others are incredibly complex. Our advice to anyone is to try several different options out and choose the one you feel most comfortable with using. Almost every broker offers a free demo account, which gives you the perfect opportunity to assess different types. Demos also have their positive side for those of you who are more experienced too, as they provide the perfect medium to hone your trading strategy without risk.
Due to the regulatory restrictions and tax laws applied to CFD trading in Canada, you will need a Canadian bank account to fund your trading activities and this is usually the only payment option available. The Canada Revenue Agency (CRA) scrutinises bank accounts to assess the “content and intent” of every trader and determines whether you are liable to pay capital gains tax or income tax on your profits.
You might want to give some thought to where you will be doing the majority of your trading. Whilst some traders might still prefer an office environment with a PC, there has been a huge increase in trading on the go using a mobile app. If you are one of those, make sure that any CFD brokers you are considering provide a suitable and reliable way to access your account from a mobile device.
On our website, you’ll find numerous CFD broker reviews for Canada. Every review we publish on our site will cover the same factors for each broker and will be laid out in an easy-to-read format. This provides you with a manageable way to compare any brokers that interest you before you make a final decision.
As well as CFD trading in Canada, a number of other financial instruments also come under the regulation of the authorities we mentioned earlier. So, if you want to extend your trading portfolio, you may wish to consider investing into the stocks themselves, or taking a look at these alternatives:
We hope that our guide has provided you with some useful and valuable information. Regardless of whether you want to trade CFDs in Canada, or you are looking for the best CFD broker in New Zealand, many of the principles of finding a good broker are exactly the same, irrespective of your location.
We do urge you to confine yourself to trading only with CFD brokers which are correctly-licensed and regulated for the Canadian market. There is a good selection to choose from and you’ll find plenty more help on our site to help you with that task.
Before you consider engaging in CFD trading, head over and read our definitive guide to finding the best CFD broker in Canada. There you’ll find out which brokers are legit for Canadians and how to choose the best one for your trading needs.
The best Canadian CFD broker is one that holds the correct licensing and best suits your trading needs. To find out all about licensing and what makes a CFD broker stand out from the crowd, then check out our in-depth guide to CFD brokers in Canada and how to find the right one.
The legality of trading with an offshore site is something of a grey area in Canadian law. However, there are plenty of excellent reasons to avoid that option altogether and select a fully-licensed and secure CFD broker in Canada instead. Why not head over and read our guide to find out why?
Trading financial products carries a high risk to your capital, especially trading leverage products such as CFDs. 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.
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