Best Forex Brokers in Canada 2018
Canadian traders have the luxury of choice when it comes to the brokers they can work with. FX Empire is here to help these traders choose the best Forex brokers in Canada. We have conducted deep research across a number of key areas including reliability, technology and the service provided by these firms, in order to help you make the right decision about your trusted trading partner.
How to Choose a Forex Broker (as a Canadian Trader)
Despite being a major developed economy, Canada is one of a handful of countries around the world that does not have a specific national regulatory agency monitoring the financial services industries. This is because the Canadian government has been lenient towards financial services providers. This means that Canadian Forex traders can literally work with brokers based anywhere.
However, the lack of a national regulatory framework to regulate offshore forex brokers also means that the Canadian authorities have no way of controlling the influx of scam brokers into the Canadian financial services industry. As a result, Canadian forex traders run the risk of losing their money to these unscrupulous brokers. Because of this risk, Canadian forex brokers are recommended to trade only with the best forex brokers in Canada and that’s where we can help you narrow down your selection.
While Canadian traders are not restricted from trading with offshore forex brokers they are still highly encouraged to select brokers based out of Canada as their broker of choice, as these brokers are able to offer several advantages which offshore based forex brokers are not able to provide to Canadian traders. Over the course of this article you will learn why it is recommended to trade with a regulated broker, and also the key facets to look for in a broker, which include regulatory status, technology, customer support and trading conditions such as spreads and leverage offered by the broker.
General Regulation & Canada’s Regulation
Although there is no national regulatory framework to regulate the activities of financial services providers in Canada, financial services providers are still being regulated at the provincial and territorial level through multiple regulatory agencies. Each of these regulatory agencies has their own specific functions. The list below shows the main regulatory agencies which are tasked to regulate financial services providers such as forex brokers in Canada.
- The Alberta Securities Commission
- The Autorite des marches financiers (Quebec)
- The British Columbia Securities Commission
- The Canada Revenue Agency
- The Canadian Securities Administrators (CSA)
- The Financial Services Commission of Ontario
- The Financial Transactions and Reports Analysis Centre of Canada
- The Investment Industry Regulatory Organization of Canada (IIROC)
- The Mutual Fund Dealers Association
- The Office of the Superintendent of Financial Institutions
- The Ontario Securities Commission
Hence despite the lack of a central regulatory agency in Canada, the country still has the largest number of financial regulatory agencies in one single country. While forex brokerage firms are presently being regulated according to the jurisdiction that the broker is based in, the Canadian government is currently contemplating unifying all the regulatory functions under one single agency. This means that in the future, Canada may very well have its own central financial regulatory agency just the Financial Conduct Authority (FCA) in the UK.
Trading Platform & Software
When choosing which broker to work with, it is also important to see what kind of trading platforms are provided by the broker. Some brokers merely focus on providing their traders with a single type of trading platform whereas other brokers may go through the effort of providing their clients with several choices of trading platforms.
Here you should look for:
- Download platform – which usually has the most functionality
- Web Trader – which can be accessed from any computer with internet connection using a login.
- Mobile trader- for trading on the go
Regardless of how many types of trading platforms are available, the most important thing is to see if the platform suits your trading needs and style. Check and see if the trading platform is also able to provide the following features such as:
- Transaction History
- Comprehensive Charts
- News Feeds
- Real Time Price Feeds
- Risk Management
- Support multiple order types
- Supports Automated Trading
- User Friendly Trading Interface
- Wide Range of Trading Tools and Indicators
Proprietary VS. Generic Platforms
More and more brokers are building their own high spec platforms to match the needs of their clients. This is always a good sign to look for in a broker as it shows a level of seriousness. Some traders like using proprietary platforms as they are quite customizable and often user friendly and tailored to all levels of trader.
The majority of Forex traders today are using the MetaTrader4 platform that is provided by most brokers. This is a generic platform which features the brokers logo on it. Just because it is the most popular doesn’t mean you will get on with it the best. You can the brokers platforms for a test drive before committing to depositing real funds. You can easily sign up for a demo account at the majority of brokers in order to “try before you buy”
Commissions, Spreads & Leverage
Apart from the broker’s regulatory statue and trading platform, the third most important consideration when making your broker’s selection is the trading cost. In forex, trading costs can be in the form of commissions or spreads levied on each trade that the traders make. In terms of spreads, they can be fixed or variable. Fixed spreads although are typically higher than variable lets a trader knows his trading cost prior to his trade execution. Variable spreads on the other hand are usually lower than fixed spreads but are susceptible to spikes due to changes in market volatility.
For brokers who offer Electronic Communication Network (ECN) access to interbank rates, (eg. those brokers who pass on the trades directly to the liquidity providers through the electronic network rather then taking the other side of the trade), there will usually be a small commission charge on top of the raw spreads which traders get from the liquidity providers. Brokers who offer ECN access are termed as Non Dealing Desk (NDD) brokers as they merely pass on the clients’ trades direct to the liquidity pool. For professional traders who deal with larger trading volumes than the average retail trader, this type of broker is the most cost effective.
As forex brokers in Canada are subjected to different regulatory requirements from the US, the leverage ratio which forex brokers in Canada are able to offer to their traders are significantly higher than what forex traders in the US are receiving from their brokers. In the U.S, forex brokers are only permitted to offer a maximum of 1:50 leverage. In addition, no hedging is permitted (eg. opening two opposite trades at the same time, like buying the EUR/USD and selling the EUR/USD simultaneously).
These are put in place by the U.S regulatory authorities in order to minimize the losses that US traders make from trading forex. For forex brokers in Canada, they have more leeway than brokers in the U.S. This is why some Canadian based brokers are able to offer leverage as high as 1:500.
Depending on the broker’s primary focus, there are 4 main types of trading accounts which traders can choose from:
A micro or mini trading account
Micro or Mini trading accounts typically have the lowest minimum deposit requirements and are geared towards beginner traders. Their minimum deposit requirement usually ranges from $100 to $250. These types of trading accounts allow traders to trade in less than a standard lot of 100,000 units of currency.
A standard trading account
For traders who are more experienced, they usually go for the standard trading account which allows them to access more trading features as well as assets to be traded. The typical minimum deposit for the standard account usually starts from $500 to a few thousand dollars.
VIP trading account
For traders who demand more from their brokers, they have the choice of the VIP trading account. This type of trading account typically requires a minimum investment which runs into tens of thousands of dollars. They also normally come with a dedicated account manager to handle the trader’s requests.
Finally if you are a Muslim forex trader, you might want to consider trading with a swap free trading account as there is no interest or commission applicable on trades making this type of trading account compliant with Shariah law.
On top of the trading account types, always make a point to check the terms and conditions for withdrawals which are attached to the different types of trading account.
Of course with all the different factors to consider, it is easy for a person to overlook customer support. Nevertheless, customer support is as important as all the other factors which a trader must not overlook. Regardless of how experienced a trader you may be, there will always be an occasion that you will need help from customer support. You need to be sure that whenever you need assistance, help is always nearby, as there is nothing more frustrating than not being able to reach customer support when you are in difficulty. Equally as frustrating is speaking to a support staff member that doesn’t’ have the information you are looking for. Hence check if the customer support is available 24 hours a day or only during office hours and how efficient they are.
In addition, check what methods are available for communicating with the support staff. The best forex brokers are those which provide their traders with different methods of contacting the support team hence ensuring that you can communicate with the broker with minimum hassles.
Usually you will be able to contact support staff by:
- Live Chat
In addition to the normal trading services offered by forex brokers, some brokers go further by providing their clients with additional value added services. These services are often offered as a further incentive for traders to sign up with the broker offering them. Furthermore these value added services also serve to help the broker differentiate their products and services from other brokers in the industry. Examples of these value added services include VPN service, one to one training, pattern charting, social trading and signal trading services.
In order to help our readers make an informed decision, we have reviewed some of the key brokers that offer trading to the area and are able to meet the trading needs of Canadian forex traders and recommend our readers to check them out. These forex brokers are all strictly evaluated on the same criteria that we have mentioned above in this guide.
- New Zealand
- South Africa
- South Korea
- Hong Kong
- United Arab Emirates
- Russian Federation
List of Brokers
|BROKER||USER RATING||REGULATED BY||HEADQUARTERS||MIN. DEPOSIT||OFFICIAL SITE|
|ASIC, CySEC, FCA||Israel||$100||Open Account|
|ASIC, BVI, FSA(JP), FSB, MiFID||Ireland||$100||Open Account|
|ASIC, CySEC, FCA||Cyprus||$200||Open Account|
|CySEC, FSB||Cyprus||$100||Open Account|
|BaFin, FCA||United Kingdom||$300||Open Account|