How to Choose a Forex Broker in Canada?
The selection of a broker holds significant importance in forex trading. Since the forex market is full of legit and dishonest brokers, it is imperative to take necessary precautions while investing your hard-earned money. Given below are some tips to help you find the best broker in Canada.
1) Choose a broker that has a good reputation
Checking the broker’s reputation is the first step before opening a live trading account. Try reading reviews of existing customers. Check the rating of a broker on various unbiased rating websites, such as Trustpilot and Forexpeacearmy.com.
2) Choose a broker that has been established for at least 3 years.
It becomes difficult to ascertain the reliability of a broker that has recently entered the market. You don’t know if the broker has enough resources to remain a going concern. Therefore, it is better to choose a broker that had been in business for at least three years or more.
3) Check out the broker’s regulation.
Always go with brokers who are fully regulated in Canada. Regulation makes sure that brokers operate with the best ethical practices. Regulated brokers hold clients’ funds in segregated bank accounts. Further, regulated brokers have to maintain enough capital to offer enough liquidity all the time.
Some reputable forex regulatory agencies in Canada are as under;
- Canadian Securities Administrators (CSA)
- Investment Industry Regulatory Organization of Canada (IIROC)
Some regulated brokers hold registration with the Canadian Investor Protection Fund (CIPF). Under the CIPF membership, brokers offer funds insurance to their clients upon becoming insolvent. Therefore, it is always worth checking if your broker is regulated.
4) Deposit and withdrawal process
It is pertinent to check how fast a broker processes fund deposit and withdrawal requests. Usually, brokers offer multiple deposit methods to make the process fast. However, the problem arises when you place a withdrawal request. Some brokers take a day or two, while others can make you wait a little longer. In either case, a delay in the deposit and withdrawal process can be a source of inconvenience. Also, a good broker should offer deposit and withdrawals at no or low processing fees.
5) International presence
The international presence of a broker shows how well a broker is recognized internationally. A broker with multiple international regulations is more likely to have the best operational framework.
6) Support in local language
Customer support is one of the significant factors where brokers usually struggle. Some brokers lack competent customer support staff, while others fail to respond timely. A reputable broker makes sure that a professional customer support team remains available all the time. More specifically, it provides an in-time resolution of clients’ concerns and is accessible in the local language.
Top 5 Forex Brokers in Canada
We have handpicked five brokers that we believe are the best for forex trading in Canada;
- AvaTrade – Offers easy-to-use multiple trading platforms
- Interactive Brokers – Suitable for both veterans and institutions
- FOREX.com – A competitive all-rounder broker
- CMC Markets – Offers a range of currency pairs
Factors That We Considered While Choosing the Best Forex Brokers in Canada
1) Analyzed Brokers’ Reputation
We have confirmed each broker’s positive reputation appearing in our list of best forex brokers in Canada. We have also read customer reviews on renowned platforms, such as Reddit and Quora. We have taken both positive and negative comments and made identifiable patterns. We have made sure not to include any broker that is known for bad experiences for clients.
2) Checked Regulatory Status
We make sure that the brokers that we have selected hold regulations with concerned regulatory bodies in Canada. After finding company registration numbers from the brokers’ official pages, we have verified them on both CSA and IIROC’s websites.
3) Tested deposit and withdrawals
To check if the brokers have efficient deposit and withdrawal processes, we tried making deposits and withdrawals with each of the brokers mentioned above and found no issues. The brokers are not only quick to process deposits but also offer fast withdrawals without restrictions.
4) Availability of demo accounts
The availability of demo accounts is vital to help you learn before you burn. All the brokers we selected offer demo accounts, enabling traders to try different money management strategies and improve trading skills without risking their real investment.
5) Features
We explored the brokers’ different services and features, such as trading costs, risk management tools, types of accounts, portfolio of tradable financial instruments, available leverage, and found them quite competitive.
6) Trading Platforms
All our brokers offer user-friendly trading platforms. They have all basic and advanced trading tools available to help clients trade forex successfully. Traders have the option to either access their trading platforms online or have them downloaded on their desktop.
7) Mobile trading platforms
The brokers also offer mobile trading apps compatible with android and IOS-based mobile phones to facilitate on-the-go traders. Clients can download the respective apps from Google or App store.
8) Effective customer support
Lastly, we tried contacting the customer support staff and raise several queries with them. The customer support teams remained friendly and responded to our questions in time.
Forex Brokers in Canada – FAQs
Is forex trading legal in Canada?
Yes, forex trading is legal in Canada. However, laws concerning the forex market are relatively strict as compared to the rest of the world. Therefore, only small numbers of brokers offer trading services in Canada.
Do forex traders pay tax in Canada?
Unlike most countries where traders need to pay tax on forex earnings, forex trading falls under the implication of capital gain tax in Canada. However, traders only have to report their forex earnings exceeding the minimum threshold of $200.
Who regulates forex trading in Canada?
The Investment Industry Regulatory Organization of Canada (IIROC) is the national regulatory body that regulates the forex industry in Canada. However, some local regulators also play their part in different jurisdictions of Canada.
How many forex traders are there in Canada?
As per the stats published at brokernotes.com, there are nearly 1.5 million forex traders in Canada. According to the Bank for International Settlements (BIS), Canada holds the sixth position amid its turnover in the currency market.
Can Canadians sign up with a forex broker from abroad?
Yes, they can. However, before accepting clients from the country or abroad, brokers need to register with IIROC to seek authorization.
Conclusion
Despite a strict regulatory framework, forex trading is becoming increasingly popular in Canada. Since there are both good and dishonest brokers in the forex market, the Canadian rigid regulatory restrictions keep traders safe from falling prey to scam brokers. While compiling the list of our best forex brokers in Canada, we took maximum precautions. However, traders in Canada should always check if a broker holds registration with IIROC before signing up with it.
