There is no set minimum required to do day trading in Canada. However, few things need to be kept in mind before initiating your day trading journey. Let's get more details on it.
Day trading is buying and selling financial instruments in a short period of time, as in, a particular asset is being bought on a specific trading day and is sold on the same day for profits, taking advantage of market movements on that day.
The most commonly day traded assets are foreign currencies, company shares, commodities such as oil, gold, natural gas etc., and bonds.
Day trading is legal in Canada. The TSX opens at 8 am and closes by 5 pm and you can buy and sell assets anytime within this time, whereas Forex markets are open 24/7.
In the United States, you are mandated to keep a minimum balance deposit of $25,000 for you to become eligible for day trading. If the deposit balance falls below the $25,000 mark, you are required to top up the balance and you cannot do day trading until it is done. However, in Canada, there is no such specific minimum balance that is imposed.
The minimum money you require depends on the financial instrument you wish to trade in.
For example, pairs of foreign currency are traded in lots and you need a minimum of 1000 lots in the currency you wish to buy and sell. If you wish to buy shares, you need the cash required to buy the required units of shares.
A company’s share is traded at $10 and you need to buy 10 units of the share, you are required to have a minimum of $100.
The minimum balance required also depends on the broker you select. Some trading platforms mandate you to keep a minimum balance in their account.
In Canada, day trading is commonly practiced and reports have suggested that it surged during the COVID-19 pandemic period.
Don't forget! The profits you reap by doing day trading must be added to your tax returns as capital gains and it does not get any concessions. The losses you incur by doing day trading can be offset in the tax returns.
Are you interested in day trading? Which is your trusted broker? With whom you have opened a brokerage account? How was your experience? Do share your views.