Is day trading legal in Canada?

Short Answer

Day trading is completely legal in Canada. Although Canadian brokers don’t require any minimum capital to start trading, unlike the U.S where brokers demand a minimum Capital of $25,000. The tax implications of day-trading are different from buying and selling regular shares.

Detailed Answer

What is Day Trading?

Day Trading or Intraday trading is considered a type of trading where an individual squares off all the positions before the end of a trading session. Intraday traders are moreover speculators who capitalize on the small intraday price movement of the security. It can be performed on stocks, options, commodities, or any asset.

Is it Legal in Canada?

In short, Yes, day trading is legal in Canada. Day trading is a completely legal and ethical practice. In the U.S, brokers demand a minimum of $25,000 in your trading account in order to start day trading. But there are no such rules in Canada. You can start executing intraday trades with as little as $1,000 in your trading account.

Tax implications

Profits generated from Day trading are not considered under Capital gains. Whenever you purchase a stock and hold it for more than one day and less than one year, Short Term Capital Gains (STCG) tax is applicable to it. In this case, as you are selling the security within one day, it is counted under speculative activities and taxed as “Business Income”.


Day trading is an extremely risky form of trading. Due to this risky nature, many brokers set a minimum capital requirement to allow individuals to start day trading. Brokers also provide leverage on day trades which makes it even riskier if the trader's view goes wrong. Apart from the risks, the losses made from day trading are treated as ‘Business losses' and can be deductible from profits to reduce taxation.

Tagged With: us brokerday tradingcanadian stockbrokerstock tradinginternational stock marketcanadian stock market
Categories: Canada
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Discussion (2)

    It is important to note that one will be penalized if day trading is done within a Tax-Free Savings Account offered by the Canadian federal government.

    Trading is very risky because it involves a lot of volatility, so it is important to have proper entry and exit strategies in place before beginning.

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How much does the average Canadian invest in stocks?

This is a tricky question and does not have an exact answer. However, an average Canadian is likely to invest less than $2,000 in stocks. This number is not fixed and may go up or down based on an individual's earning, saving, expenses and financial gaols.

Is Forex trading legal in Canada?

Forex trading is completely legal in Canada. But before going with any broker, be sure the broker is licensed by the IIROC or authorized locally by a regional regulator.

Is it better to invest in Canadian or American stocks?

Based on the historical data, the Canadian stock performances haven’t even gone close to the US stocks. However, nobody knows what the future holds for us.

Is it good to invest in the Canadian stock market?

Yes, Canadian stocks prove to be a shelter to investments with its wide variety of natural resources and stable banking system.

Is Thinkorswim free in Canada?

No, Thinkorswim is not completely free in Canada. Thinkorswim is powered by TD Ameritrade, a commission free US brokerage firm. The stock broker charges $0 commissions on online US stocks and ETFs. You have to bear some cost on option trades.