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Day Trading Canada Guide for Beginners

Updated on: April 25th, 2023

Day trading is a controversial and emotionally charged topic among Canadian traders. While one side is looking for a quick buck, the other warns of total loss and financial ruin. The truth, as is so often the case, lies somewhere in the middle. This article will assist you in better understanding trading and the associated opportunities and risks.
day trading

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What is day trading?

Day trading in Canada means buying and selling stocks, derivatives, and currencies in a single trading day. Day traders make trading decisions based on technical analysis rather than reading balance sheets or analyzing companies. Strict risk management is the key to success.

You can trade part-time or after work thanks to global trading in different time zones and 24-hour trading on the foreign exchange market.
day trading chart example
The chart above depicts the price movement of a stock over the course of a single trading day. It is a stock that was traded on a stock exchange in the United States. The chart shows that the opening price of $ 39.52 on that day was nearly identical to the closing price. You won’t have made any profits or losses that day if you’ve had this stock in your portfolio for a long time.

The situation is very different for you as a day trader. Over the course of the day, the stock dropped nearly 7.5 percent, but it made up for it by the end of the day. As a trader, you want to profit from such changes. Short sales can be profitable if prices are falling. This greatly increases your trading options and allows you to profit from almost any market situation.

What do day traders trade in Canada?

It is critical for day traders in Canada to use a trading instrument that has both liquidity and volatility. “Liquidity” means that as a trader, you can always buy and sell enough, and that the spread, or the difference between the bid and ask prices, is small. Because a day trader earns money from both directions, “volatility” means that the instrument has a sufficient range of fluctuation.

  • Forex stands for “Foreign Exchange” and refers to currency trading. The trader, for example, buys dollars, pays for them in euros, and profits when the dollar rises in value against the euro. You can start with smaller amounts and learn how to trade, just like with CFD trading. The most important factors that influence currency rates are global news and economic data.
  • Stocks: from Europe and the United States are simple to comprehend. You can profit from rising or falling prices by trading them long or short. Messages are the primary source of movement for them. To trade, you’ll need a slightly larger account because you’ll occasionally want to make very small changes of a few cents.
  • CFDs are a popular trading instrument for small accounts and, as a result, are ideal for newcomers. They chart the movement of indices like the DAX and Dow Jones, as well as metals like gold and silver, crude oil, and Bitcoin. There are hundreds of different CFDs to choose from to suit any trader’s needs. You can trade in both directions and profit from falling prices here as well. You can use small amounts to open an account.
  • Futures and options are often referred to as the “premier class” for traders because they require more training than the other options. They also keep track of the performance of other instruments, such as indices, metals, oil, agricultural products, and so on, which, like CFDs, can include indices, metals, oil, agricultural products, and so on. For trading, a certain amount of collateral (“margin”) must be deposited, which can be quite substantial for individual futures. This is changing for some futures now that the American stock exchange has introduced so-called micro-futures. Smaller trading accounts can also benefit from these. They are currently available on US stock indices, gold, and Bitcoin.
Learning effort Account size selection
Forex middle Small middle
shares Simple Big High
CFDs middle Small High
Microfutures middle middle Tiny
Futures / options High Big High

Table 1: What do day traders trade in Canada

History of day trading

This type of exchange trading originated in the United States. Day trading became popular as securities trading shifted to the Internet and a slew of new online banks and brokers popped up. Intraday trading had always been practiced by professional bank traders. Intraday trading was possible for private individuals because professional day trading brokers’ executions are very quick.

As a result, you can profit from the smallest daily fluctuations, trade to the second in the same way that professional securities traders do, and profit from day-to-day movements.

Important things you need for day trading

To get started, you’ll need a broker. This is where your orders are taken and placed on the stock exchange. The word “broker” is derived from the English word “broker.” Day trading brokers are experts at executing orders quickly. The fees charged by these providers are significantly lower than those charged by your home bank.

Day trading software

The broker provides you with the necessary software. . You can get started with the free trading programs. These provide all of the necessary features. It’s only worthwhile to invest in a program with more features if you’re trading futures with very specific strategies. Many platforms are programmable, allowing you to automate the execution of your trading strategies. However, this entails a significant learning curve. There is no universal programming language; each manufacturer has its own.

The importance of real-time prices cannot be overstated. This is provided free of charge by the broker for CFD and Forex trading. For stock and futures prices, you usually have to pay a small fee. Under no circumstances should you use the free delayed rates offered by some brokers. These aren’t meant to be used for day trading.


To get started, all you need is a standard PC. Because you may need to see a lot of information at once depending on your trading style, having at least two monitors is a good idea. On a small notebook screen, keeping track of things can be difficult. A special trading PC is recommended if you want to get started properly.

Start-up capital

You’ll want to start trading with real money once you’ve gained enough experience with demo accounts and simulated trading. To do so, you’ll need a real-money trading account. Depending on the broker and the market being traded, the minimum deposit varies. This amount is very low with CFD and Forex brokers, but it is significantly higher with stocks and futures trading. It is critical that you keep your expectations in check. If you only put down a few hundred euros, you will almost certainly not be able to make a living. But perhaps you don’t need that; a little extra cash is enough for you. Your winnings will be reduced by the fees and, of course, taxes.

If you want to make a living as a full-time trader, you must be prepared for bad times and have an initial capital of C$ 100,000 or more. You can start with a lot less as an after-work trader.

Day trading for beginners

A bachelor’s degree in business administration or a banking apprenticeship are not required to work as a day trader. On the contrary, business administration students or bankers are frequently the worst traders because they have firm market opinions and are unable to adapt to changing circumstances.

If you’re new to day trading, I recommend reading “How do I learn day trading?” First and foremost. There is a study plan as well as references to other texts for beginners there.

Day trading, like so many other things, necessitates practice in order to put the strategies and skills you’ve learned into practice. Do you remember the episode of “The Big Bang Theory” where Sheldon just wants to learn to swim using an online course? That, too, will not work without practice. You can practice putting what you’ve learned into practice with a demo account (also known as “paper trading”) or a Microforex account with a small stake.

Important topics for beginners and for slightly advanced users are:

  • The workings of trading instruments (CFDs, Forex). Make sure you know everything there is to know about the trading instrument you want to use. Even if some of them are complicated, you must understand how to calculate risk and position size.
  • Breakouts and news trading are examples of day trading strategies. There are innumerable strategies that you can use depending on the market phase and trading instrument. A demo account allows you to create your own strategies and test them without risk. Maintain the rules in your trading plan so that the trades are easy to understand and repeat.
  • The management of risk. This is the most important point for a trader because it safeguards your money. Above all, a good day trader is a risk manager. Learn how to use stop limits to keep your losses to a minimum.
  • The psychology of trading You play an important role in day trading success. Never underestimate the power of your mindset when it comes to trading.
  • Documenting and analyzing trades in order to learn from them. Everyone makes mistakes; the only way to avoid them in the future and trade profitably in the long run is to learn from them.

Advanced training

Advanced training Markets are constantly shifting. Trading strategies that are profitable today may become unprofitable due to new circumstances.

The spread of high-frequency trading and fully automated trading with algorithms, for example, has significantly altered the movements of many stocks and indices. Day traders could still profit from arbitrage in the 1990s. This means you could profit from price differences between different trading venues. You sold a stock on one exchange and then immediately sold it on another for a higher price.

Pros and Cons for Day Trading Canada

It’s exciting if you’re in the center of what is happening on the stock exchange
It’s fun!
Day trading can be very profitable when done properly
You will always find new things to learn and improve
You can get active in many communities and get to know a lot of like-minded people
Start-up capital is required
Day trading can be very risky if not done properly
There can be negative reactions among friends and family
It can be frustrating when getting loses in a row
You have to keep training and staying up to date and that takes time

This is what separates winners from losers in day trading

Over 80% of all customers lose money when day trading, according to statistics that brokers are required to publish under new European rules set by the ESMA (European Securities and Markets Authority). Customers who only lost a single cent at the end of the month are included in these monthly statistics. Nonetheless, the figures are alarming because some traders never make a profit. Why is that, and how can you avoid becoming a member of the losers’ club?

So what’s the deal with so many day traders losing money? It is frequently a combination of errors rather than a single cause. The following are the top three reasons, in my opinion:

Top 3 reasons for day trading losses

  1. No trading strategy: You need set trading rules if you want to be successful in the long run. Beginners, in particular, are prone to acting on instinct. Arguments such as “It appears that the dollar is falling” or “The chart appears to be long” will be heard. Such trades cannot be replicated; a set of rules is required. To put it another way, would you invest in a company that lacks a business plan?
  2. Overtrading: Orders are executed very quickly thanks to modern trading programs and brokers. Many newbies only open one trade at a time. There’s also a follow-up error: if there are a lot of losses in a day, the position size is increased to make up for it. This raises the stakes, and the losses continue to mount. That’s a recipe for disaster. Day trading is a statistical issue as well. Losses are inevitable, but their total cannot exceed your winnings in the long run. You’re a gamer, not a trader, if you put everything on one card and trade too many large positions.
  3. Laziness: Please accept my apologies for speaking so bluntly. Many novices believe that they can make quick money in the stock market without exerting any effort. Many traders, for example, avoid having to keep a trading journal because they don’t want to. However, this is a critical tool for learning from mistakes and improving strategies.

If you look at the numbers in a different way, you’ll see that around 15-20% of people engage in day trading. As a result, it is possible to be successful and win indefinitely. Prepare to learn! Please think about the reasons listed above and avoid falling into these traps. Read articles until you have a complete understanding of them. Check out YouTube Videos for a wealth of free information. You could also hire a coach or attend a seminar.

How to become a full-time trader in Canada

The profit potential of day trading attracts many newcomers. The first profits are forecast and some are already dreaming of quitting their jobs. Not so fast!

Every trading system has so-called draw-down phases, so keep that in mind. Despite correct implementation, your trading strategy loses its effectiveness during these phases. The markets are sometimes very calm and tend to move sideways; there is no price volatility. Then it becomes difficult to find opportunities. As a professional trader, you must be financially and mentally capable of surviving such periods. You must also factor in the costs of health and pension insurance, as with any self-employed activity.

Trading hours: Then you can trade

The global financial markets are open at various times throughout the day. The benefit is that trade is always taking place somewhere in the world! This allows you to begin trading immediately after work. A good side income is not to be overlooked, and day trading can be entertaining as well. And who knows, maybe one day you’ll be one of those traders who can live off their profits.

The currency and crypto markets are open 24 hours a day, 7 days a week; however, unlike the crypto markets, there are trading breaks on weekends and holidays in forex. Currencies, on the other hand, have different times when they are most active. Check out the Canadian forex time guide for more info.

Day trading risks

First, a word of caution: advertisements frequently make exaggerated promises. Please don’t believe that trading is a simple way to make money without having to work. This isn’t the case at all! The promises of simple and risk-free methods are only intended to persuade you to buy something. There are no “secret tricks” or “always-working indicators” either. To advertise, new hype terms are also used. You’ve been hearing a lot about “Trading with Artificial Intelligence,” which is said to be risk-free and quick to succeed. Please be wary of anything that appears to be too good to be true.

Always keep in mind that stock market trading can be dangerous. The money in your account will quickly disappear if you do not stick to your risk limits, increase position sizes too much, or start gambling. You should devote sufficient time to learning how to trade properly.

Markets change

At any point in time, market behavior can shift. Market behavior can shift at any time as a result of new instruments, market participants, legal, economic, or political changes. This can lead to unanticipated outcomes, such as: B. a drop in the price of oil. As a day trader, you must always prepare for the unexpected and be able to adapt to completely new situations, learn quickly, and react quickly. You never stop learning in day trading; strategies that work well today may be obsolete tomorrow.


A day trader spends the entire day in front of a computer screen, whereas a passive investor can use that time for other things. If you have a regular job, you may be able to supplement your income with income from your long-term equity investments. The total income in this case may even be higher than that of a Canadian trader.

Day Trading FAQ – Questions and Answers for Beginners

Can I get rich quick and easy with day trading?

No! Learning professional day trading is not easy and requires work and training like any other profession. While advertisers like to say the opposite, don’t believe the promises of easy fortune. These are only there to sell you something and to make money from you!

Which broker should I use?

We looked around the market and had discussions with several brokers. Check out the top recommended brokers for day trading here.

What is the risk of day trading?

Don’t underestimate the risk involved in day trading! It is imperative that you avoid confusing trading and gambling, otherwise you risk a total loss of your capital. Many new traders go broke because they just get started without much preparation or learning.

How much can I earn day trading?

It’s hard to come up with a blanket answer. The possible income depends on your own learning progress, on the discipline in implementing the trading plan and many other things. From our conversations we know that margins of 10% per year, which is more than the overall market usually brings, to over 100% per year and more have been realized by other traders.