Due to regulations in Canada only a hand full of brokers are willing to be comply with regulations enough to be able to accept you as a customer. This means our list of options for you is short compared to other countries but don't worry, all our options are really good.
1. AvaTrade - Best Canadian Forex Broker
Founded in 2006 AvaTrade operates all over the globe and is currently regulated in three tier 1 jurisdictions and three tier 2 jurisdictions, this means AvaTrade has gone to great lengths to being compliant and is an extremely low risk broker to use. They offer their customers the chance to trade both forex and CFDs.
AvaTrade offer users the industry favorite MetaTrader along with their own platform AvaTrade WebTrader and AvaOptions. If you're interested AvaTrade also offer ZuluTrade and DupliTrade for those who like to do social copy trading. AvaTrade are well known for have very competitive fees compared to their closest competitors.
- Minimum initial deposit: $100
- Average spread EUR/USD: 0.91
- Time to open account: 1 day
- Spread: as little as 0.6 pips
- Number of base currencies: 5
- Demo account: yes
2. Forex.com - Runner up Canadian Forex Broker
FOREX.com is owned by Gain Capital (GCAP), which trades on the NYSE. FOREX.com is well known for offering multiple types of trading platform, although most traders use MetaTrader 4 they can avail of Forextrader Pro and Web Trading. This makes them popular among traders who like to utilize different platforms, normally for more advanced automated trading programs.
Personally I really liked using their mobile app which is top quality compared to many of their competitiors and incorporates most of the options you get on desktop. They also integrated their research and investigation services into their app that allows traders to get real time data to help make their decisions.
- Account minimum: $100
- Pairs offered: 80+
- Average Spread: 0.2 pips - 1.0 pips
- Commissions: $0 – Variable starting at $60 per million traded depending on account
3. Fusion Markets - third place Forex broker in Canada
Fusion markets are known for their low costs, some studies show that they are up to 36% cheaper than their competitors. They are also popular for their no minimum deposit and minimum account size.
Fusion Markets also offers the industry standard MetaTrader4 (MT4), they offer webtrader for browser and mobile connections. Users can also select MetaTrader Signals for social trading.
Due to some regulations Fusion Markets is able to offer substantially higher leverage than their competitors which is always an attractive point for margin traders. This combined with low fees and flexible minimum account types makes them our third choice. Fusion Markets are regulated by the Vanuatu Financial Services Commission (No. 40256) and their parent company is ASIC regulated.
Types of Forex Orders
The forex market is similar to the stock market in that it uses some basic orders for buying and selling. These are:
Market order: This will fill the order at the best price available at the time, typically at the bid when buying currency pairs or at the ask when selling.
Limit order: This will fill the order only when it reaches a certain price.
Stop order: Your position will be exited using a market order once a specific price is hit.
Stop limit order: A limit order is used to exit your position once a certain price is hit.
Forex Trading and Risk:
Any investment and trading will usually involve some level of risk. Investing in stocks carries a risk of loss, and there are risks involved with owning a company, for example. However, forex trading carries some different types of risks. Some of the specific risks that are involved with forex trading include:
The instrument that investors and traders will use to capitalize on small movements in the price of currency can also lead to substantial price swings, which can result in margin calls. As a result, investors must add additional funds or margin costs.
Volatility or variability refers to the changes in price quotes for a currency pair over a time period. When volatility is high and the swings in prices are wider, opening or closing a position can be more challenging, since the prices are moving up and down.
Governments and central banks use interest rates as a means of increasing or decreasing the money supply within the economy. Since the exchange rate between a pair of currencies is typically determined from the supply and demand for each currency in the pair, changes to the interest rates of one or both of them can result in higher or lower movements in the pricing.
Governments will always back their native currencies, and when geopolitical events occur in a country, this will often be reflected in the currency prices. As a result, currencies from countries with a government that is at a higher risk of these events will often trade at a discount, while more stable and reliable governments tend to garner premiums.
A counterparty is the entity that provides investors with assets when they trade. There is some risk involved with these companies, including the risk of them defaulting and no longer being able to cover all of their transactions. However, regulators such as the IIROC in Canada will regulate these companies to make sure that they have an appropriate safety net in place for this situation.
The ability to sell relies on somebody being willing to buy. Participants in the market could be reduced by geopolitical events and more.
How We Made Our Selection:
Compared to the other areas of the world, Canada is somewhat limited in the number of forex brokers available. This is partly due to fragmented authorities between the provinces and guidelines that many believe to be unnecessarily complicated. However, the brokers that are available are excellent. We evaluated them based on the following:
Transaction Costs:
Brokers will often make more money in the spread between bid and ask prices for currencies. The smaller the difference between the bid and ask, the cheaper it is for investors to trade currency pairs.
IIROC Regulation:
The Investment Industry Regulatory Organization of Canada (IIROC) regulates brokers. They regulate the amount of leverage and stipulate the compensation that must be provided in the event of broker insolvency. It has put the Canadian Investor Protection Fund in place to compensate traders to up to one million dollars if the broker defaults. Currently, there are strict limits on the margin and leverage allowed in Canada, with a maximum of 2.2%.