Forex trading has become a very popular investment opportunity in recent years and there is no surprise there considering the market is very liquid and always fluctuating, creating attractive options to make a profit.
If you’re in Canada, we can say that Forex trading in this country is legal, and to get started all you need is to find the best Forex brokers Canada.
Basic concepts. Forex Trading.
There are a few concepts that all Forex traders need to learn in order to manipulate their odds to make a profit and be as successful as they want to be in the currency exchange market.
Currency pairs
All currencies in the Forex market come in pairs.
Some currencies are considered “major currencies”. In fact, they count for more than 90% of the total daily trade in the Forex market.
Other currency pairs are considered common or exotic and much less traded.
The difference between both currencies is what we call the exchange rate.
Spreads
Spreads refer to the cost of buying a currency with another currency. It’s very easy to calculate and the unit used is called pip. A pip is equivalent to 0.0001.
Lower spreads are more beneficial for traders as they represent a lower cost for their currency exchange transactions. Spreads are often determined by the broker of your choice.
Leverage
In the Forex market, traders need to make deals with large amounts of money to be able to make a considerable income.
Leverage is the money that the broker lends to the trader to maximize their chances to make a significant return.
While leverage is a very useful tool for Forex traders, it must be used with care and smartly, since it also maximizes the risk of losses.
Forex trading in Canada
Forex brokers in Canada have to be registered with different entities that guarantee they are operating in compliance with the national regulations. In particular, there is the Investment Industry Regulatory Organization of Canada (IIROC), which is the body in charge of regulating the brokers and financial agencies that exchange currency.
At the same time, Canada has other regulatory bodies in place. There are also regional bodies with which brokers have to be registered. In Toronto, it is the Ontario Securities Commission, while for the region of British Columbia the regulation falls under the responsibility of the British Columbia Securities Commission. Lastly, in the regions of Montreal and Quebec, there is the Autorité des Marchés Financiers.
The different regulatory bodies in Canada are in charge of setting rules and general standards and performing regular inspections. They are also in charge of investigating misconduct from brokers and protecting the investors’ rights.
Best Forex Brokers in Canada
The following list has the best Forex broker in Canada. Newer investors will appreciate their features, services, and costs.
Whatever broker you choose, make sure they match your trading style and satisfy the needs of your level of expertise. This will guarantee a much more successful future as a Forex trader.
IG. This broker is considered the best overall Forex trading broker in Canada. They take very seriously their security, and also offer low fees and decent commissions. No surprise they have earned a reputation for offering a great service.
CMC Markets. This broker is recognized for offering the lowest fees and having the widest variety of currency pairs in Canada. An option for those looking into investing in different currencies.
FOREX.com. This forex broker is one of the best for newer traders and beginner investors. They have a very intuitive platform and educational tools, making it a great choice for beginners.
TD Ameritrade. Another great broker that has been recognized for having the most efficient customer service. A long and established reputation makes them a good choice for beginners but also more experienced traders.