If you are just starting out your investment journey, it is imperative to find the right platform to buy and sell shares. There has probably never been a better time to start investing in the stock markets. This is due to a significant rise in the number of online brokers available for you to begin trading. The online brokerage space has become crowded but it has also meant that trading costs are lower and platforms now provide users with a wide range of products and services.

In the last year, the number of retail investors who have entered the stock market has experienced an uptick at the global level. The bear market of 2020 and its astonishing recovery has provided investors a glimpse of the wealth-generating potential of the equity markets. This has also generated demand for online broking services. As new players enter this segment and capitalize on a widening user base, it might be difficult for traders to find a platform that is a perfect fit.

So, how do you choose the right online broking service? There are multiple factors that you need to consider and make the decision-making process simpler. A state-of-the-art platform will have higher fees or commissions, while a few investors would like to hold accounts with large financial institutions that have a strong brand name.

However, before you choose an online broker there are a few basic questions you need to answer. Are you a seasoned trader who will buy and sell stocks frequently? Are you a day trader or a long-term investor? Are you looking to invest passively via exchange traded funds (ETFs) or mutual funds or will you apply advanced trading strategies including futures and options.

While most Canadian stock trading platforms provide you with similar services, there will be a difference in trading fees. As the saying goes- a penny saved is a penny earned and it’s important to note the subtle differences in price and services offered. So, let’s take a look at five best stock platforms for traders in Canada here.

 

1. Questrade

Questrade

Questrade is one of Canada’s fastest growing online brokerages and is a top stock trading platform. The company claims to add 200,000 accounts on an annual basis and has over $25 billion in assets under management. Questrade prides itself on being a low-cost broker as it charges no annual fees. When you start investing on Questrade, you will pay between $4.95 and $9.95 per trade to buy stocks while you can purchase ETFs without any cost.

In case you are an active trader, Questrade claims its innovative suite of services will help you build a robust portfolio. Its IQ Edge is a software for traders and is downloadable on your desktop. The Questrade Global feature allows you to analyze global markets and trade currencies as well as commodities across devices.

Further, for a monthly fee, users can get access to live-streaming data as well as active trader pricing, making it a top bet for active traders. For example, the active U.S. data package is for traders who want exposure to the U.S. markets. It is priced at U.S.$89.95 and in case you trade more than $48.95 in commissions, you are eligible for a rebate of $19.95. In case you spend more than $399.95 in commissions, your entire monthly subscription fee is eligible for a rebate.

The Questrade platform not only allows you trade stocks, options and ETFs, but also provides you with exposure to margin trading, foreign exchange and CFDs (contract for differences). With a Questrade margin account, you can leverage stock trading, short-sell your holdings, trade complex option strategies and also leverage your precious metals trading expertise.

While there are zero annual fees, users need to have a minimum balance of $1,000. In addition to CFDs and forex, you can also open registered accounts such as the TFSA, RRSP and RESP with Questrade.

 

2. National Bank Direct Brokerage

National bank

Back in late 2016, the National Bank Direct Brokerage (NBDB) was the first Canadian brokerage to offer commission-free trades on ETFs, for investors buying over 100 shares. This was aimed at making investing more accessible to the retail investor.

For the active investor, NBDB charges $0.95 per trade to buy stocks while to purchase options the price is $0.95 as well as $1.25 per option contract. An active investor is one who makes over 100 trades each quarter.

For the young investor (customers below the age of 30), NBDB charges $4.95 per trade and for options it is $4.95 in addition to the $1.25 per contract. NBDB also allows 10 free trades each year for young investors. For regular investors, National Bank Direct Brokerage charges $6.95 per trade for stocks.

It also levies an annual fee of $100. However this fee is waived if you hold assets totalling at least $20,000 as of May 31st. These fees are also waived off for young and active investors or if you have carried out at least five commission-generating stock, ETF or option trades between June 1 and May 31.

At NBDB, users also have the option of purchasing securities on margin. Using a margin account, traders can borrow against the loan value attributed to the securities you hold. By using leverage or margin trading, you can take advantage of market opportunities and increase your purchasing power as well as enjoy competitive interest rates.

Users can also track the performance of their investments by creating watchlists that display real-time price movements. You can get a detailed overview of the performance of each of your investment accounts for a specific period. The NBDB platform provides you access to analysis from investment research platforms such as Morningstar as well as from National Bank Financial that can be used to accelerate your decision-making process.

For sophisticated investors, tools such as InvestCube, Market-Q and Recognia can be used to evaluate your portfolio.

3. Wealthsimple Trade

The third brokerage account on our list is Wealthsimple Trade, that allows you to buy and sell stocks and ETFs on major U.S. and Canadian exchanges. Wealthsimple does not charge any commissions and there is no requirement in terms of minimum account balances either.

The company aims to simplify the process of investing and users can get snap quotes for real-time stock prices on demand. You can also search and track stocks easily with your watch list. You will soon be receiving notifications on your device if there are any movements in stock prices while the user will also receive news and updates for stocks on the watch list.

Wealthsimple has over 1.5 million customers that use its investing, tax and savings products. The company claims it uses state-of-the-art data encryption while handling all financial information and is protected by 2FA or two-factor authentication.

Wealthsimple Trade charges users a 1.5% currency conversion fee on all trades of U.S.-denominated assets. This fee is applicable for both purchases and sells. So, in case you buy U.S.$1,000 worth of Apple stock and the exchange rate for converting CAD to USD is 1.3; with a 1.5% conversion fee, the total cost will be around $1319.5.

Wealthsimple states its low-cost digital-first platform allows the company to offer commission-free trades. It further explains that executing trades is very cheap and a brokerage does not have to charge clients via commissions. The only trading fee is a currency exchange fee and it now plans to launch premium features that will attract subscription fees.

Users should note that Wealthsimple Trade is a platform where you can trade stocks, ETFs and even a few cryptocurrencies. However you will not be able to trade mutual funds or subscribe to an IPO right now.

4. Interactive Brokers

interactive brokers

One of the largest brokerages in the world, Interactive Brokers is a publicly listed company that trades on the NASDAQ. It has over $330 billion in client equity with over 1.32 million client accounts. The company generates close to $3 million in average daily revenue.

Similar to most other brokerages, you can open different types of accounts here including TFSA, RRSP or even a small business account.

Compared to other platforms, Interactive Brokers has a simplified pricing structure. There are two basic pricing systems which include tiered pricing and fixed pricing. As the name suggests, tiered pricing commissions will decrease based on the volume you trade. It also depends on the trading exchange as well as clearing fees. 

If you buy up to 300,000 shares per month, the amount is $0.008 per share. This reduces to $0.005 per share for monthly trades between 300,001 and 3,000,000. The platform charges $0.004 per share between 3,000,0001 and 20 million shares traded each month while the fee is $0.003 per share for monthly trading volumes higher than 20 million.

According to a report by StockBrokers.com, Interactive Brokers offers the lowest margin loan interest rates compared to any other broker. You can also earn extra income on fully paid shares of stock that you hold in your account. 

Interactive Brokers may borrow your shares to lend to traders who wish to short-sell a particular stock and are willing to pay interest to borrow these shares. You are paid an interest each day the shares are on loan and can also trade your loaned stock without any restrictions.

Interactive Brokers also provide you with free trading tools allowing you to take advantage of market opportunities, analyze results and make better investment or trading decisions.

 

5. Qtrade

Qtrade Investor-Qtrade Investor earns first place in MoneySense

One of the first online brokerages in Canada, Qtrade is a trusted name that allows users to buy and sell stocks, mutual funds and ETFs on all the major exchanges in Canada and the U.S. It is one of the most popular discount brokerages in Canada. Qtrade is part of Aviso Wealth which is one of Canada’s largest wealth management companies with over $90 billion in assets under management.

Qtrade has partnered with over 150 banks, financial planning companies, credit unions, insurance firms, trust entities, investment dealers and portfolio managers.

In case you want to buy equities, Qtrade charges $8.75 per trade and this figure falls to $6.95 in case you trade over 150 times in a single quarter. For options it charges $1.25 per contract in addition to the above-mentioned rate. 

While a few ETFs can be bought for free on Qtrade, you have to pay $8.75 on other ETF purchases. You also have to pay $25 in account management fees each year.

The brokerage platform continues to expand its suite of services and products. In 2020, it added New Portfolio Score which analyzes your portfolio and gives you a grading score based on five financial metrics. It launched a news service which is powered by Dow Jones and also has a sector-specific newsletter for subscribers.

In the last year, Qtrade has also expanded its ETF and stock screening tools while it has enhanced options trading to provide real-time information.

 

The key takeaways

If you are looking to access the financial markets, you know it’s a fairly easy and inexpensive process due to a variety of online broking platforms that are available right now. Every online broker is optimized for a certain type of client which includes the average retail investor, as well as a day trader or even a passive investor. Every broker on this list charges a different fee and choosing the right platform requires due diligence on the part of the investor in order to get the most bang for your buck.

All the brokerages mentioned here have described their portfolio of products and services on the website. You can easily understand the kind of tools and resources a platform offers. However, it might also make sense to open a brokerage account for free and test a particular platform before diving in completely. You can access these platforms on various devices to see if their interface is user-friendly and if it ticks most of your boxes.

Investing in equities is one of the best ways to create long-term wealth and identifying a brokerage platform is the first step in this process. It’s imperative to use all the tools and resources provided by the online broker which will help you reach your financial goals, especially if you are an active investor.


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