There is more than one reason why online forex trading is so popular in the last years. Firstly, trading forex is a form of investment, unlike many ways of earning money online, which have more to do with being lucky, than with being skilled and able to predict the future events.
Moreover,FX tradinggives every trader a chance to participate in the global trading market. So, even if you live in Canada, you can trade currencies of more than a dozen countries from all over the world. Due to the fact that there are a lot of trading options, the market is open 24/7 during working days and it is only closed at the weekend.
The loonie is one of the most popular currencies among traders, not just in Canada, mostly due to the stability of the currency, which is usually regarded as a result of the stability of Canadas political and economic system as a whole.
Whether you decide to tradeUSD/CAD, EUR/CAD, or some other currency pairs, there are several things which you should know about forex trading in Canada, and in general. Typically, most Canadian forex brokers offer similar things, you can get more or less most currency pairs that are traded otherwise, similar leverage rates, and currency quotes, but there are some differences which can help you determine which broker has a better offer. A smart trader always shops around before deciding who to entrust with their money.
This is the major aspect of the trade offer. Currency pairs are generally divided into major, minor and exotic. Major currency pairs are the ones consisted of the American dollar and the seven other most traded currencies in the world, including the Canadian dollar. Minor currency pairs are combinations of the worlds most traded currencies, excluding the USD.
For exampleEUR/CAD, CAD/JPY and GBP/CADare all minor currency pairs. Last but not least, exotic pairs are pairs that include some of the less traded currencies like theTurkish lira or the South African Rand. These currencies are usually paired with the US dollar, which is by far the most traded currency in the world.
Closely tied to the currency pairs is the spread. Keep note of this term, it is one of the most important terms in forex. The spread signifies the difference between the buy and the sell price. Brokers have to offer two different prices because that is how they make their profit. The bigger the gap, the more profit they make. Generally, brokers offer a lot tighter spread on major and more popular currency pairs, whereas if you like to trade less popular currencies, you will have to settle for a less favourable spread.
The leverage is another important segment, as it allows every trader to trade a lot larger amount of currency units than the amount of money that they have at their disposal. If the leverage is 100:1, it means that you will be able to trade currency worth $10,000 with an amount of just $100. Some countries and their respective regulators have set limits on the amounts of leverage that brokers can offer. In Canada that is not the case and Canadians will be able to trade with leverage rates as high as 1000:1. Trading with leverage requires a high level of caution and you need to be fully aware of the associated risks and dangers.
Forex trading takes place through a platform. Most brokers nowadays offer a web-based trading platform, a website, where you can register and log in without having to download any software.
However, most brokers also offer a download version which you can download for free and then install on your computer. For some traders, that is a more convenient option.
Moreover, as we live in an age when we use are smartphones and tablets more often than ever, brokers wanted to make sure that people who are constantly on the move will also be able to trade forex. Most brokers, at least the most popular ones have developed, usually, more than one mobile trading platform in order to cater to the needs of owners of different mobile devices, most notably iOS and Android.
Some traders who are new to forex are looking for simpler and less complicated solutions, whereas long-time traders are looking for options and features that will allow them to make them most of their trade. That is why many brokers offer platforms with different degrees of complexity and integration. For example, the so called MetaTrader platform gives traders a chance to analyze price movements, see important information as charts and graphs and even use automated trading mechanisms.
Brokers are aware that even the best spreads are sometimes not enough to motivate many new traders. That is why they offer a bonus, sometimes even more than one. Generally, we can distinguish between:
A No Deposit Bonus is usually paid out to new traders, and, as the name suggests they are not even required to make a deposit first. The Deposit Bonus is usually a percentage match (e.g. 100%) of the traders deposit, up to a certain amount. If the broker offers a 100% match up to $100, it means that you will receive extra $100 with a deposit of $100. Other promotions may include tournaments, where the winner can earn a pretty hefty amount of money.
Other things should also be taken into consideration. For example, most brokers accept at least a few different payment methods. Some of them may be exclusively available to Canadian traders, whereas other are international payment methods, like popular e-Wallets or major credit or debit cards. It is important to check whether the forex broker that you like to trade with charges any extra fees on deposits and withdrawals. Furthermore, it is also important whether payments are processed quickly or not.
Forex trading is a serious business, it is far from and it is always wise to prepare yourself as much as you can, and learn as many useful things as possible. Brokers usually offer learning materials, including recorded videos, charts, analytics data, e-books, articles and some even organize special webinars that teach traders about forex. The more informative and detailed their teaching material is, the better chance you have of becoming better at trading forex.
If you encounter any problems regarding trading, or your account, you would surely want to resolve them as quickly as possible. It is always smart to address the brokers customer support team, if youre unsure what else to do. That can usually be done either via email, phone, or live chat.
The legal status of forex trading in Canada is quite clear, Canadians are legally allowed to trade forex.
There is also a federal regulatory body IIROC(Investment Industry Regulatory Organization of Canada). IIROC is a non-profit, self-regulatory organization which was formed after the merger of two similar organizations, theInvestment Dealers Association of Canada(IDAC) and Market Regulation Services Inc. in 2008.
The IIROC is overlooked and monitored byCanadian Securities Administrators(CSA) an umbrella organization which provides support to a range of federal and provincial organizations and its aim is to coordinate and harmonize the regulation of the financial markets of Canada. Moreover, a range of provincial organizations like theOntario Securities Commission(OSC),Autorit des Marchs Financiers(AMF) and theBritish Columbia Securities Commission(BCSC) also participate in the process of regulation and control, but their efforts are synchronized with the help of the IIROC.
As a trader, you neednt worry too much about the regulations and the legal details. It is sufficient to know that every broker that wants to offer services in Canada needs to go through the legal filter provided by the organizations named above.
It depends on the broker and the offer in question. Sometimes the bonus is awarded automatically, to every trader who meets the criteria, whereas at other times traders might be required to opt in in order to receive a bonus.
2. Is it more favourable for Canadian traders to trade currency pairs that include the Canadian dollar?
There is no restriction in terms of what currencies you can trade. Canadians are also allowed to trade other currencies. On the other hand, it is wise to consider trading pairs which include the Canadian dollar as you probably know more about it, compared to other currencies.
3. Am I allowed to open an account at more than one broker?
Yes, there is no limit in terms of the amount of brokers you can be registered with. As long as the broker accepts Canadian traders and you provide the correct requested information, you can register multiple accounts.
IIROC warns potential traders that trading with leverage is highly dangerous. There are suggestions that traders should not immediately start trading with high leverage. It is smarter to start trading with lower leverage, and go with a higher degree only after you get more experienced.
Only if you earn quite large amounts of money trading forex, the tax authorities will consider forex as an important source of income and tax your income as capital gains. If youre a casual trader, you shouldnt worry about taxation.
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