In case you are interested in trading foreign currencies in Canada, you probably have a bunch of related questions. Is it legal? Should one pay taxes? What are the best local brokers? How to become a trader? The guide below will give answers to all of these questions.
In basic terms, Forex trading is speculating on the changes in the prices of the currency pairs. It has nothing in common with gambling. Each decision is based on profound calculations. That is why, in Canada, it is legalized as a financial activity. That means it is regulated by authorities and each broker and exchange is checked for compliance with local laws. On a national level, it is monitored by the IIROC.
Many newbies ask: “Why should I choose a broker regulated by the IIROC?”. That guarantees that the company selected operates with the law and good business practices and that your money is protected from all sorts of fraud. But one must highlight that it is safe if a source is licensed in your particular region, but is not licensed nationwide by the IIROC.
Certainly, like any other legitimate business activity, it involves taxation. There are two basic approaches. Non-professionals who do not make their living from Forex trading Canada must pay capital gains tax, which constitutes 50% of your marginal tax rate. However, if it is your business or major job, you are charged income tax, which equals 100% of your marginal tax rate.
How to begin your trading career?
1. Find a suitable exchange or broker. The first step is to check the license. Then, make sure the platform offers all the currency pairs and other assets you are interested in. Afterward, look through its commissions, deposit/withdrawals rates, research features, passive trading options, etc. If you seek our expert advice, for new users, we would recommend Forex.com, Interactive Brokers, and AvaTrade.
2. Try a demo mode first. Even if you feel that you are almost ready to trade for real, extra practice will not hurt. Besides, before making a real deposit to any source, you must check whether it is comfortable to utilize.
3. Form and test your strategy. A demo account is a perfect instrument for such a task. As long as you are a newbie, opt for simple trend-based strategies that do not involve too much activity (too many trades per day).
4. Pay enough attention to self-education throughout your investment career.
In the end, we would like to highlight that trading foreign currency can become your major job and ensure a reasonable living if you invest enough time, effort, and diligence.
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