Best Online Brokers in Canada 2022
With the advent of online brokers, Canadians now have more options than ever to access the stock market and put their money to work. And if you’re like most of us right now, freaking out over your stocks as a result of the current pandemic, debating an online broker might not be an option.
No matter how much or how little cash you have to start with, and whether you are a seasoned investor or a newbie, you don’t need to worry—there’s a virtual broker out there to suit you. But it’s not easy to choose from the best online brokers in Canada when there’s an overwhelming number of options! To help you decide, we’ve put together this guide to the top online brokers and the criteria you should keep in mind when ultimately making your pick.
In This Article:
What is an Online Broker?
An online broker is a platform that lets you open investment accounts, often called brokerage accounts, to trade securities on the stock market. You need to have a brokerage account if you want to buy and sell stocks, bonds, and ETFs (Exchange Traded Funds). While many traditional banks have their own brokerages, you can also choose an online brokerage in Canada that is independent of a bank.
Comparing the Best Trading Platforms in Canada
|Broker||Account Minimum||Basic Trading Fees||Quarterly Fee|
|BMO InvestorLine Self-Directed||None||$9.95||$0-$15,000 = $25 (*can be waived)
$15,000+ = $0
|Qtrade Investor||None||$6.95–$8.75||$0-$25,000 = $25 (*can be waived)
$25,000+ = $0
|TD Direct Investing||None||$7–$9.99||$0-$15,000 = $25 (*can be waived)
$15,000+ = $0
Questrade was one of the first, and still remains one of the most affordable online discount brokerages. Trading commissions are only $4.95 to $9.95, and ETFs are free to buy, so you can try the platform out by building an entirely free portfolio consisting only of ETFs. Account types offered include TFSAs, RRSPs, and RESPs, and these registered accounts can hold both USD and CA$, which can help you avoid paying currency conversion fees when trading US stocks and ETFs.
Those who open a new Questrade account with at least a $1K account balance will get $50 in free trades, and Questrade will also rebate up to $150 in outgoing transfer fees for each account transferred to the Questrade platform. Additionally, Questrade’s Instant Deposit feature allows you to securely and instantly transfer up to $3,500 into your account to start trading right away. Its overall affordability convinced us to name Questrade our the Best Online Broker in Canada for 2020.
Questrade is a member of the Canadian Investor Protection Fund (CIPF), and also holds additional private insurance, so investments are covered up to $10M in the event of Questrade’s bankruptcy.
You can get a feel for Questrade’s user experience by checking out this video about buying stocks with the Questrade platform:
If your attitude is, ‘the fewer fees, the better,’ then Wealthsimple Trade could be a good choice for a discount broker.
Wealthsimple Trade has no trading fees (it’s the only discount brokerage firm in Canada that’s commission-free) and offers access to a huge selection of Canadian and US stocks and ETFs via a personal, TFSA, or RRSP account.
Trades are unlimited and there’s no minimum deposit, making Wealthsimple Trade technically the most inexpensive online Canada broker. Wealthsimple Trade will even reimburse an outgoing administrative transfer fee of up to $150 on investment account transfers valued at more than $5,000.
The platform makes money via a 1.5% currency conversion fee. Investors need USD to trade US-listed securities, and as Wealthsimple Trade only supports deposits in CA$, this means you will effectively pay a 1.5% fee on every American stock and ETF trade. It’s worth noting, however, that most brokers charge a conversion fee of 2%, so Wealthsimple Trade is still a fantastic deal.
The Wealthsimple Trade interface is quite simple and its stock analysis tools are less in-depth than what other online brokers offer. It also doesn’t offer a full array of U.S. and Canadian ETFs and stocks, though the selection is still impressive and sufficient for the average DIY investor. Additionally, Wealthsimple’s no-frills approach might be beneficial for those who are relatively new to online stock trading, as they won’t be overwhelmed by an intricate interface. But more advanced traders might feel limited by the information the platform provides.
Securities held in a Wealthsimple account are insured up to $500K.For a limited time, get a $25 cash bonus when you open a Wealthsimple Trade account and fund at least $150. Sign-up today to take advantage of this exclusive offer!
BMO InvestorLine Self-Directed
BMO InvestorLine Self-Directed is an award-winning platform geared toward Canadian traders that are comfortable making their own investments without external investment advice.
The platform supports a number of investment types, including trading stocks, bonds, GICs and mutual funds, and trades are $9.95 each.
Though there is a $25 quarterly fee for non-registered accounts with balances below $15K, the fee is waived for registered accounts or for clients that make at least two commissionable trades within a 6-month period.
BMO InvestorLine is a member of the CIPF, so an account’s investments are insured up to $1M.
Those who like the idea of having external advice to guide their trades, but still want to make final trading decisions autonomously, might consider BMO’s adviceDirect platform.
BMO InvestorLine adviceDirect is a hybrid of both a self-lead broker with personal, objective recommendations from an investing expert. The platform warns you when you are about to make trades that would deviate from your self-defined profile, reminds you to rebalance your portfolio when it goes off-kilter after a market swing and gives you access to BMO Investment Specialists if you’d like more detailed investment advice.
Qtrade Investor was previously known as Credential Direct, and it can be a particularly cost-effective broker for frequent traders and young investors.
Its regular $8.75 fee for trading equities and options is on the high-ish end compared to some of its competitors, but this fee drops to $6.95 for those who make 150 or more trades per quarter, or for investors between the ages of 18 to 30.
Users can trade mutual funds for free and can trade from a list of 100 select ETFs for free as well. Overall it’s a very intuitive platform, and you can get a glimpse of it via this video about the simple process of selling a stock with Qtrade:
Qtrade Investor’s quarterly $25 fee is on the high side, but this is waived for those with account balances of $25K or more.
Another downside is that Qtrade Investor charges a $100 fee for closing an account within one year of opening, so it’s not a very feasible option if you’re looking to test the waters to see if self-directed trading suits you.
Qtrade Investor is a member of the CIPF.
TD Direct Investing
TD Direct Investing is one of the pricier online brokers on our list, but it may be worthwhile for those that want a platform specifically tailored to their level of experience and trade volume. TD offers different dashboards for different investor profiles and provides a substantial amount of information about the stocks its users trade.
The Markets and Research Centre closely tracks tradable companies’ earnings and dividends, and TD has an extensive library of online investing tutorials, webinars, and informative videos available to users, like the one below about setting financial goals within TD Direct Investing’s most commonly used dashboard, WebBroker:
Canadian and U.S. stocks and options cost $9.99 per trade with TD Direct Investing, but this is reduced to $7 per trade for investors that make at least 150 trades per month, and trading mutual funds is commission-free.
Online Brokers vs. Traditional Brokers
A traditional broker, sometimes called a full-service broker, is a person that invests in the stock market on your behalf. You give them direction and insight into your risk tolerance and financial goals, and they recommend investments and execute trades for you.
Traditional brokers might be paid per-trade fees of a hundred dollars or more, or they might charge their clients a percentage of their total portfolio assets. For this reason, traditional brokers best serve high net worth clients who want tailored investment advice for their portfolios.
An online stock broker, often called a discount brokerage in Canada, is a software platform that lets you access the stock market yourself. Instead of paying someone to give you investment advice and make trades for you, you are usually responsible for making all your trades independently.
An online broker is best for those with portfolios of less than $250,000 and who want to manage their investments themselves.
|Online Broker||Full-Service Broker
|Investor independently makes trade decisions based on personal judgement||Investor’s choices are guided by the stockbroker’s research, experience, and consultation|
|Trades are executed by the investor via the broker’s online trading platform||Trades are executed by the stockbroker|
|Trades can be executed at any time||Trades can be executed only during the broker’s availability|
|Usually provides limited or no additional financial consultation services to the investor||May provide additional financial consultation services to the investor, like retirement planning and tax preparation/sheltering strategies|
|Fees are charged per trade, per currency conversion, and/or per quarter||Fees may be charged per trade or as a percentage of an investor’s assets|
|Fees are lower than those charged by full-service brokers||Fees are high and take a proportionally higher cut of an investor’s returns|
|Best suited for portfolios below $250K in value||Best suited for portfolios above $250K in value|
Though some online brokers may provide investment education materials for their users, they generally do not provide personal consultation with the investor.
Investors who do not have the time, patience, or interest needed for responsible self-directed trading and the regular research and autodidactic education it requires might be better off with either a full-service stock broker or a robo-advisor. Check out our list of the best robo-advisors in Canada if you prefer a ‘set it and forget it’ investing approach.
Though fee amounts and structures may vary from one online broker to the next, they save an enormous amount on overhead by being based primarily online, and will invariably be less costly overall than what you will pay with a full-service broker.
There’s no hard and fast rule as to what portfolio value you need before it makes financial sense to work with a full-service broker, but a rule of thumb is that those with combined assets of $250,000 or more should at least consider moving away from online or discount brokers and robo-advisors toward working with a traditional stockbroker.
Emotionality and Broker Bias
Market volatility can make investors prone to rash, emotionally driven decision-making, and it’s easier to give in to that when you can make trades with a single click.
Working with a full-service broker can serve as a rational counterpoint to any knee-jerk decisions you might make independently. Conversely, some full-service brokers may receive financial compensation for selling a specific mutual fund or stock, which can compromise the impartiality of the trading advice they give you.
When you make your own trades, you are making decisions based solely on your own best interest.
How do Online Brokerages Work?
Online discount brokerages work by facilitating the buying and selling of stocks, bonds, mutual funds, ETFs, and other forms of investment through various stock exchanges. Investors can sign up to use a brokerage’s trading platform, and the brokerage charges the investors fees based on trading volume, activity/inactivity levels, and currency exchange. Investors autonomously choose when to buy or sell their investments.
What are the Downsides of Investing with an Online Brokerage?
While online brokers have many advantages (convenience, little to no commission fees, and easy access to trends and company information to name a few), there is one major downside to online trading — you may find yourself easily addicted. The ability to make a trade with just the click of a button may become distracting, preventing you from fulfilling other important activities. Keep this in mind before you begin using an online brokerage and set rules for yourself!
How to Choose an Online Broker
It’s easy to be seduced into signing with the online broker that offers the lowest trade fees, but you should consider more factors than that before making your choice.
Get a feel for an online broker’s platform by checking out some of its preview videos. Do the account management and trading interfaces seem simple and user-friendly? Is the platform available on both mobile and desktop? Is the provided amount of stock info scanty, overwhelming, or just enough?
Keep in mind that some online brokers update stock trading quotes in real-time, but others have a lag, which could be problematic for high-volume traders, like day traders.
Those who are trading independently for the first time might opt for an online discount broker that has extensive investor education resources in the form of tutorial videos, blog articles, FAQs, etc.
Some online brokers might also offer a combination of autonomous trading with personalized advice from investing experts, akin to working with a full-service broker. This might be an attractive option for those who are new to investing, but it could be unnecessary for experienced traders.
If you’re new to investing, you’re strongly encouraged to read our Investing in Stocks 101 article, which serves as a good primer for learning about the different ways you can gain income from stocks; the risks associated with trading; the questions to ask yourself before you start trading, and more.
Some online brokers require no minimum investment to open an account; others require a minimum investment of several thousand dollars. Keep the amount you’d like to start investing with in mind when researching brokers and make sure it isn’t below the minimum of a broker you’re interested in.
Fees aren’t the only factor to consider, but they are certainly one of the most important. Consider the types of investments you plan to make—stock trading, options, ETFs, mutual funds, bonds, etc.—and check out the different commissions each broker charges on those.
Keep in mind that a broker might charge not only fees for each trade, but also fees for account maintenance, currency conversion, inactivity, and closing/transferring out an account. Some brokers may offer commission-free trades or reduced fees for investors that make a minimum number of trades per month. If you plan to trade frequently, or if you have ambitions to become a day trader, you might opt for a broker with a trading fee structure that incentivizes frequent trading.
If you find yourself stuck between two options that have a seemingly even number of pros and cons, check with both to see if one of them might offer a special sign-up bonus that you may not have noticed, like cashback.
Some online brokers, particularly those administered by banks, might also incentivize the use of other financial products, like savings accounts or credit cards, in tandem with their investing platform.
Many day traders use online brokerages in order to execute their quick exchanges within the same trading day, due to the little to no trading commission fees that come along with many online brokerages. All of the above online brokers can be used for day trading, with Questrade being one of the top favourites, as it offers discounts if you’re an active trader.
How to Open a Brokerage Account
- Start by checking if the broker you’re interested in has a minimum investment requirement, and compare that with how much you can afford to invest.
- If you meet your new broker’s minimum investment requirement you can fund the account by transferring money from a bank account or another broker into your new online broker. This process should take anywhere from a few days to a week or so.
- Document any fees charged to you for moving money out of your bank account or previous broker into your new broker, as your new broker might have a policy in which it will reimburse you up to a certain fee amount.
- Go through any tutorials offered by the broker that might explain how to use its online platform and review any investor education materials it offers as well.
- Start buying stocks, ETFs, bonds, and mutual funds to your heart’s content!
Which Online Brokerage is Best For Beginners?
Questrade, Wealthsimple Trade, BMO InvestorLine Self-Directed, Qtrade Investor, and TD Direct Investing are all great options for beginner stock traders. Due to the fact that Wealthsimple Trade offers no basic trading fees and no annual account fee, this is an ideal choice for younger investors and those who simply wish to try their hands at trading.
Divest from High Commissions
Are you unsure if you’re ready to take the leap to make your own trades during this trying time? You’ll never know until you try. Test out an online broker that has no account closure fee or even commission-free trades and then fund the account with the minimum amount required.
That way the stakes are relatively low, and the errors you make while learning the ropes of self-directed trading will have a minimal effect on your financial future. But one thing is certain no matter which online broker you open an account with: Responsible self-directed investing can dramatically increase your overall level of investing knowledge and seriously cut down the fees you would otherwise pay to a robo-advisor or full-service broker, thus increasing your overall return on investment.