- Intuitive and customizable interface
- Access to a complete trading academy
- Ultra-fast order execution thanks to dedicated servers
- Customer service available 24/7 via live chat and email
- Intuitive and customizable interface
- Access to a complete trading academy
- Ultra-fast order execution thanks to dedicated servers
- Customer service available 24/7 via live chat and email
- Wide range of instruments available, including ETFs
- Competitive low spreads on major currency pairs and indices
- Multilingual customer support available 24/7 via live chat, email, and phone
- Wide range of instruments available, including ETFs
- Competitive low spreads on major currency pairs and indices
- Multilingual customer support available 24/7 via live chat, email, and phone
- Standard and demo accounts available
- Competitive spreads
- Support available 24/5 via live chat, email and phone
- Registered with FCA, CySEC, CBI, ASIC
- Standard and demo accounts available
- Competitive spreads
- Support available 24/5 via live chat, email and phone
- Registered with FCA, CySEC, CBI, ASIC
- Standard, raw and demo accounts are available
- Competitive spreads
- Regulated in Australia (ASIC)
- 24/5 support via live chat, email and phone
- Standard, raw and demo accounts are available
- Competitive spreads
- Regulated in Australia (ASIC)
- 24/5 support via live chat, email and phone
- Standard and demo accounts available
- Competitive spreads [no commissions or brokerage fees on equities and ETFs].
- Registered with several regulators
- 24/5 support via live chat, e-mail and phone
- Standard and demo accounts available
- Competitive spreads [no commissions or brokerage fees on equities and ETFs].
- Registered with several regulators
- 24/5 support via live chat, e-mail and phone
- Standard accounts available
- Educational resources included
- Earn up to 5% in cash bonuses
- IIROC registered and CIPF covered
- Reputable customer support, available by phone and email
- Standard accounts available
- Educational resources included
- Earn up to 5% in cash bonuses
- IIROC registered and CIPF covered
- Reputable customer support, available by phone and email
- Low commission
- Educational resources included
- IIROC registered and CIPF covered
- Chat, phone and email support available weekdays
- Minimum deposit: 1000$
- Low commission
- Educational resources included
- IIROC registered and CIPF covered
- Chat, phone and email support available weekdays
- Standard accounts available
- Low commissions
- IIROC-registered and CIPF-covered
- Chat and email support, renowned for its accessibility
- No educational resources
- Standard accounts available
- Low commissions
- IIROC-registered and CIPF-covered
- Chat and email support, renowned for its accessibility
- Very low trading fees, among the most competitive on the market.
- No hidden commissions, ideal for traders on a budget.
- Powerful tools and great flexibility.
- Responsive and efficient customer support, available 24/5.
- Registered with ASIC
- Very low trading fees, among the most competitive on the market.
- No hidden commissions, ideal for traders on a budget.
- Powerful tools and great flexibility.
- Responsive and efficient customer support, available 24/5.
- Registered with ASIC
- What is Forex or the foreign exchange market?
- What is a Forex broker?
- How to choose a Forex broker?
- Which Forex Broker is Best for a Beginner?
- How to Trade Forex with an Online Broker?
- Which Currency Pairs Should You Trade on Forex with an Online Broker?
- What are the fees of Forex brokers?
- What strategies for trading with a Forex broker?
- What is the taxation on Forex income in Canada?
What is Forex or the foreign exchange market?
The Forex market (short for “Foreign Exchange”), also known as the currency or FX market, is the largest and most liquid financial market in the world. It operates 24 hours a day, five days a week, with a daily trading volume exceeding several trillion U.S. dollars. This market is based on the exchange of currency pairs, where one currency is bought while another is simultaneously sold. Each pair is written in the format XXX/YYY, such as USD/CAD (U.S. Dollar against Canadian Dollar) or EUR/JPY (Euro against Japanese Yen).
The first currency in the pair is called the base currency, and the second is the quote currency. For example, if the USD/CAD pair is quoted at 1.35, it means that 1 U.S. dollar is equal to 1.35 Canadian dollars.
Several key players are active in the Forex market. Central banks influence exchange rates through monetary policy decisions. Financial institutions and hedge funds execute large-scale transactions, while multinational corporations trade currencies to manage international operations. Finally, retail traders access the market through Forex brokers, which allow them to speculate on price movements using leverage.
Forex trading offers several advantages that appeal to investors. The market’s round-the-clock operation creates opportunities at any hour. Its high liquidity ensures rapid order execution with minimal slippage. Brokers often provide leverage, allowing traders to control larger positions with a relatively small amount of capital—though this also increases potential risk. Additionally, unlike the stock market, Forex trading allows investors to profit in both rising and falling markets by selling one currency against another.
What is a Forex broker?
Un broker Forex, ou courtier Forex, est une plateforme qui permet aux investisseurs d’acheter et de vendre des devises sur le marché des changes. Il sert d’intermédiaire entre le trader et le marché interbancaire, où les grandes institutions financières échangent des devises à grande échelle. Grâce aux brokers en ligne, le Forex est devenu accessible aux particuliers, qui peuvent spéculer sur l’évolution des taux de change depuis une interface intuitive et avec un capital relativement faible.
Forex brokers offer currency pairs such as EUR/USD, GBP/JPY or USD/CHF, and allow you to open positions with or without leverage, depending on the desired level of risk. They provide advanced tools to analyze the market, such as real-time charts, technical indicators and automated trading features. Some brokers also offer access to CFDs (Contracts for Difference), allowing you to speculate on currency fluctuations without actually owning the underlying asset.
Compare the best Forex brokers regulated in Canada.
How to choose a Forex broker?
Choosing a Forex broker is an essential step for trading currencies under good conditions. Several criteria must be taken into account to select the platform that best suits your needs and trading style. Here are the main elements to analyze before opening an account.
1. Regulation and Security of Funds
A trustworthy Forex broker should be regulated by a recognized financial authority, ensuring the protection of client funds and transparent trading practices. In Canada, reputable brokers are typically registered with:
- The Canadian Investment Regulatory Organization (CIRO) (formerly IIROC)
- The Canadian Investor Protection Fund (CIPF)
CIRO-regulated brokers are required to:
- Segregate client funds from company operating funds
- Maintain minimum capital requirements
- Adhere to strict reporting and compliance standards
Additionally, CIPF provides protection for clients of member firms in the event of insolvency, covering up to CAD 1 million per account.
To verify a broker's regulatory status, consult the CIRO's official website or the broker's disclosures.
2. Type of Broker: Market Maker or ECN/STP
There are two main categories of Forex brokers:
Criteria | Market Maker Broker | ECN/STP Broker |
---|---|---|
Execution Mode | Creates an internal market, taking the opposite side of clients' orders. | Sends orders directly to the interbank market. |
Spreads | Fixed or slightly variable, generally higher. | Variable spreads, often tighter. |
Commissions | None or very low; costs are built into the spread. | Commission per traded lot, but more competitive spreads. |
Execution Speed | Fast, but risk of requotes during high volatility. | Ultra-fast execution with no requotes, suitable for scalping. |
Price Transparency | The broker controls pricing and can adjust quotes. | Direct access to real interbank market prices with no broker intervention. |
Slippage (price changes) | Possible during high volatility, as orders are processed internally. | Less frequent, since orders are routed directly to the market. |
Leverage | Often high (up to 1:500 with some brokers). | Limited according to regulation (the maximum leverage allowed for retail traders in Canada). |
Target Trader Type | Beginners, swing traders, and occasional traders. | Scalpers, active traders, and professional investors. |
Possible Conflict of Interest | Yes, as the broker may act as counterparty to client orders. | No, the broker does not trade against its clients. |
Suitable Conditions | Ideal for traders looking for low fees without commissions and a simple interface. | Best for those seeking fast execution and tight spreads, even if commissions apply. |
What type of broker should you choose?
- Beginner : Market Maker (fast execution, no commission)
- Advanced Trader: ECN/STP (more transparent execution, tight spreads)
3. Spreads and Commissions
Forex brokers primarily earn revenue in two ways:
- Spreads: the difference between the buying price and the selling price of a currency pair. These can be fixed or variable.
- Commissions: applied to each transaction, generally per lot of 100,000 currency units.
4. Leverage Offered
Leverage allows traders to amplify gains (and losses) by increasing position sizes with limited capital. In Canada, CIRO imposes leverage limits to protect retail traders:
- Up to 50:1 for major currency pairs (e.g., USD/CAD)
- Up to 20:1 for minor and exotic currency pairs
These limits aim to mitigate excessive risk. While some offshore brokers may offer higher leverage (e.g., 1:500), they often lack CIRO regulation and CIPF protection, increasing potential risks.
It's advisable for Canadian traders to choose CIRO-regulated brokers to ensure compliance with national standards and safeguard their investments.
5. Available Trading Platforms
A good Forex broker should offer a platform that is both intuitive and efficient. The most popular options include:
- MetaTrader 4 (MT4): Ideal for automated trading and advanced technical indicators.
- MetaTrader 5 (MT5): An enhanced version of MT4 with access to more financial instruments.
- cTrader: Known for its fast execution and high level of transparency.
- Proprietary Platforms: Some brokers offer their own web-based or mobile trading platforms, designed to suit their specific client needs.
6. Deposit and Withdrawal Methods
A reliable broker should offer several methods for depositing and withdrawing funds easily. Check the available options:
💳 Credit card (Visa/Mastercard)
🏦 Bank transfer
📱 E-wallets (PayPal, Skrill, Neteller)
💰 Cryptocurrencies (Bitcoin, USDT, etc.)
Hidden Fees
Some brokers charge withdrawal fees or impose long delays for processing requests.
7. The quality of customer service
A good broker should offer responsive and available customer service in case of technical or administrative problems. Before opening an account, test:
- Contact methods: online chat, phone, email
- Responsiveness: quick response and in English if possible
- Availability: 24/7 support, especially during trading hours
8. Educational Tools and Resources
If you are new to Forex trading, choose a broker that offers:
📊 Webinars and online training
📈 Market analysis and trading signals
📘 Guide to learn how to use the platforms
Which Forex Broker is Best for a Beginner?
Choosing a Forex broker when you are starting out can be complex, as you need to prioritize a simple, secure platform with transparent fees. A good broker for beginners should offer:
- An intuitive interface: a platform that's easy to learn, with clear tools and mobile access.
- A free demo account: to practice without risk using virtual money.
- Competitive fees: reasonable spreads and no hidden commissions.
- Responsive customer service: available in English and accessible via chat, phone, or email.
- Reliable regulation: a broker licensed by a recognized authority (such as the IIROC).
- Access to educational resources: guides, webinars, market analysis, and tutorials.
- Appropriate leverage: limited (maximum 1:50 in Canada) to limit risks and avoid rapid losses.
- A wide selection of currency pairs: to trade major Forex pairs (EUR/USD, GBP/USD, USD/JPY...).
How to Trade Forex with an Online Broker?
Trading Forex with an online broker involves several key steps.
1. Choose a Reliable Forex Broker
The first step is to select a regulated broker that offers an intuitive platform, competitive fees, and appropriate leverage. Check the following criteria:
- Regulation by a recognized authority (such as the Canadian Securities Administrators).
- Competitive spreads and no hidden fees.
- Access to a high-performance platform (MetaTrader 4, MetaTrader 5, cTrader...).
- Responsive customer service, potentially available in French.
2. Open a Trading Account
Once the broker has been selected, you need to create an account. The procedure generally includes:
- Fill out a registration form with your personal information.
- Verify your identity by submitting a piece of identification and proof of address.
- Select the account type (standard account, ECN account, demo account, etc.).
- Accept the broker's terms of use.
3. Depositing Funds into Your Account
To start trading, you need to fund your account via:
💳 Credit card (Visa/Mastercard)
🏦 Bank transfer
📱 E-wallets (PayPal, Skrill, Neteller)
💰 Cryptocurrencies (depending on the brokers)
4. Choosing a Currency Pair to Trade
Forex trading relies on trading currency pairs such as:
- Majors: USD/CAD, GBP/USD, USD/JPY (the most liquid and the least volatile).
- Minors: EUR/GBP, AUD/NZD (less traded but interesting).
- Exotics: USD/ZAR, EUR/TRY (more volatile with higher spreads).
5. Analyze the Market and Define a Strategy
Before Opening a Position, Analyze the Market Using:
- Technical Analysis: Use charts and indicators (like RSI, MACD, moving averages) to identify trading opportunities.
- Fundamental Analysis: Monitor economic news (interest rates, inflation, employment data) to anticipate market trends.
- Trading Plan: Define your objectives, acceptable risk level, and capital management strategy.
6. Placing a Trade Order
On your platform, you must:
- Select the currency pair to trade.
- Define the position size (in lots).
- Choose the order type: ✅ Market order: immediate execution at the current price. ✅ Limit order: buy or sell at a defined price. ✅ Stop order: execution when the price reaches a certain level.
- Add a stop-loss (to limit losses) and a take-profit (to secure gains).
- Validate the order.
7. Manage Your Positions and Adjust Your Trading
Once the order is executed, it's important to monitor your trade in real time:
- Adjust the stop-loss or take-profit according to market movements.
- Follow the evolution of economic news that may impact the currency pair.
- Close a position manually if necessary to secure profits or limit losses.
8. Withdrawing Your Profits and Optimizing Your Strategy
Once you have accumulated profits, you can request a withdrawal to your bank account or e-wallet. Remember to:
- Check the withdrawal times and fees imposed by the broker.
- Analyze your trading performance and adjust your strategy.
- Continue to learn and improve through the broker's educational tools (webinars, market analysis, demo accounts, etc.).
Which Currency Pairs Should You Trade on Forex with an Online Broker?
Forex trading is based on the exchange of currency pairs, which are generally categorized into three main groups: majors, minors, and exotics. Each type of pair has distinct characteristics in terms of liquidity, volatility, and spreads. Below is a summary table of the most commonly traded currency pairs with online brokers.
Category | Currency Pair | Description | Average Spread |
---|---|---|---|
Majors | EUR/USD | Euro vs US Dollar – the most liquid and traded pair in the world. | 🔹 0.5 to 1.5 pips |
Majors | GBP/USD | British Pound vs US Dollar – volatile but very popular. | 🔹 1 to 2 pips |
Majors | USD/JPY | US Dollar vs Japanese Yen – moves often influenced by Japan's monetary policy. | 🔹 0.8 to 1.5 pips |
Majors | USD/CHF | US Dollar vs Swiss Franc – considered a safe-haven currency in uncertain times. | 🔹 1 to 2 pips |
Majors | AUD/USD | Australian Dollar vs US Dollar – sensitive to commodity prices. | 🔹 1 to 2.5 pips |
Majors | USD/CAD | US Dollar vs Canadian Dollar – influenced by oil price fluctuations. | 🔹 1.5 to 2.5 pips |
Minors | EUR/GBP | Euro vs British Pound – less liquid than majors, but still frequently traded. | 🔹 1.5 to 3 pips |
Minors | EUR/AUD | Euro vs Australian Dollar – influenced by both Asian and European markets. | 🔹 2 to 4 pips |
Minors | GBP/JPY | British Pound vs Japanese Yen – very volatile, with large price swings. | 🔹 2.5 to 5 pips |
Minors | NZD/USD | New Zealand Dollar vs US Dollar – closely tied to commodity exports. | 🔹 1.5 to 3 pips |
Minors | EUR/CHF | Euro vs Swiss Franc – typically stable, but can be affected by SNB policies. | 🔹 2 to 4 pips |
Exotics | USD/ZAR | US Dollar vs South African Rand – highly volatile, linked to precious metals. | 🔹 15 to 50 pips |
Exotics | EUR/TRY | Euro vs Turkish Lira – influenced by inflation and Turkish monetary policies. | 🔹 10 to 40 pips |
Exotics | USD/MXN | US Dollar vs Mexican Peso – sensitive to US economy and trade relations. | 🔹 10 to 30 pips |
Exotics | GBP/SGD | British Pound vs Singapore Dollar – low liquidity and high volatility. | 🔹 8 to 25 pips |
Which currency pair to choose?
- Beginner? → Prioritize major pairs (EUR/USD, USD/JPY, GBP/USD) for their tight spreads and liquidity.
- Experienced Trader? → Opt for minor pairs (EUR/GBP, GBP/JPY) for more volatility and opportunities.
- High risk appetite? → Exotic pairs (USD/ZAR, EUR/TRY) offer high potential gains, but with wider spreads and significant volatility.
What are the fees of Forex brokers?
Forex brokers apply different types of trading fees that can impact investor profitability. These fees vary depending on the type of broker (Market Maker or ECN/STP), the currency pair traded, and market conditions. Here are the main fees to be aware of before choosing a Forex broker.
1. Spreads (price differences between buying and selling)
The spread is the difference between the buy (Ask) and sell (Bid) price of a currency pair. This is the main fee applied by Market Maker brokers. It can be fixed or variable, depending on market volatility.
Example of average spreads
- EUR/USD → 0.5 to 1.5 pips
- GBP/USD → 1 to 2 pips
- USD/JPY → 0.8 to 1.5 pips
Tip: an ECN/STP broker generally offers tighter spreads but applies a commission per trade.
2. Transaction fees
Some brokers charge a fixed commission per lot traded, in addition to the spread. This model is common among ECN brokers, where orders are executed directly on the interbank market.
ECN Commission Example:
5 $ to 7 $ per standard lot (100,000 currency units) for a round trip (buy + sell).
3. Swap Fees (Overnight or Rollover)
Swap fees are applied when you keep a position open after market close (generally 11 PM GMT). This cost depends on the interest rate differential between the two currencies in the traded pair.
Exemple de swap
- Sur EUR/USD, si l’euro a un taux d’intérêt plus faible que le dollar, un trader achetant l’EUR/USD devra payer des frais pour garder sa position ouverte.
- À l’inverse, s’il vend EUR/USD, il peut recevoir un crédit (positif si la devise vendue a un taux plus élevé).
4. Currency Conversion Fees
If you trade a currency pair that is not denominated in your base currency (e.g., an account in CAD trading USD/JPY), the broker will apply a currency exchange fee.
Example of Conversion Fees
A broker may charge 0.25% of the amount converted for a transaction in USD with an account in CAD.
5. Inactivity Fees
Some brokers charge inactivity fees if you don’t make any trades within a certain period (typically between 3 and 12 months).
Inactivity Fees Example
15 CAD to 75 CAD per month after 6 to 12 months without trading.
6. Deposit and Withdrawal Fees
Brokers may charge fees when you deposit or withdraw funds from your trading account. These fees vary depending on the payment method used.
Example of withdrawal fees
- Bank transfer: fixed fees between CAD 7 and CAD 70 depending on the country and the bank.
- Credit card: some brokers charge 1 to 3% of the amount withdrawn.
- Electronic wallets (PayPal, Skrill, Neteller): fees between 0% and 3%.
What strategies for trading with a Forex broker?
Forex trading offers different strategies adapted to the profiles and objectives of traders. Some methods favour quick gains on small movements, while others focus on long-term trends. Here is a summary table of the main Forex trading strategies and their characteristics.
Strategy | Description | Example | Trader Profile |
---|---|---|---|
Scalping | The trader opens and closes positions in seconds or minutes to capture small price variations. Requires rapid execution and a reduced spread. | Buying EUR/USD on an upward breakout with a gain of 5 to 10 pips in a few minutes. | Experienced trader Loves intensive and fast trading |
Day Trading | Positions are opened and closed on the same day, avoiding overnight fees. Objective: to take advantage of intra-day fluctuations. | Buying GBP/USD at the opening of the London market and closing before the end of the US session. | Active trader Does not want to keep positions open overnight |
Swing Trading | The trader keeps positions for several days to several weeks to capture longer trends. Less stress than scalping or day trading. | Buying USD/JPY after a rebound on a key support and holding for 1 to 2 weeks. | Patient trader Looks for medium-term opportunities |
Trend Trading | Follow an upward or downward trend over a prolonged period, using technical indicators (moving averages, RSI). | Selling EUR/CHF after a confirmed support break on the daily chart. | Methodical trader Suitable for long term profiles |
Breakout Trading | Enter a position after the break of a key level (support/resistance) to capture a rapid movement. | Buying AUD/USD after an upward breakout of a consolidation channel. | Dynamic trader Loves rapid movements and trend confirmations |
Carry Trading | Profit from interest rate differentials between two currencies by remaining positioned in the long term. | Buying USD/TRY to take advantage of the interest rate differential between the two currencies. | Long term investor Prefers less active trading |
Hedging (coverage) | Risk reduction by opening opposite positions on correlated pairs or with hedging options. | Buying EUR/USD and selling GBP/USD to reduce exposure to the US dollar. | Cautious trader Ideal for protecting a portfolio in times of uncertainty |
Grid Trading | Place multiple buy and sell orders at regular intervals, regardless of the direction of the market. Risky but effective strategy in a volatile market. | Place long and short orders on USD/JPY every 20 pips in a consolidation zone. | Advanced trader Loves semi-automated strategies |
Algorithmic Trading | Use of trading robots (Expert Advisors) to execute orders automatically according to a defined algorithm. | Using a scalping bot on EUR/USD that places orders based on moving averages. | Tech-savvy trader Prefers trading automation |
Loves intensive and fast trading
Does not want to keep positions open overnight
Looks for medium-term opportunities
Suitable for long term profiles
Loves rapid movements and trend confirmations
Prefers less active trading
Ideal for protecting a portfolio in times of uncertainty
Loves semi-automated strategies
Prefers trading automation
What is the taxation on Forex income in Canada?
In Canada, profits from Forex trading are subject to taxation, but the applicable tax treatment depends on whether the Canada Revenue Agency (CRA) classifies your trading activity as capital gains or business income.
1. Tax Treatment for Individual Traders
If your Forex trading is considered a hobby or an investment activity, profits are typically treated as capital gains. In this case, only 50% of the gains are taxable, and they are included in your income and taxed at your marginal tax rate. For example, if you earn $10,000 in capital gains, only $5,000 is taxable. This treatment is generally more favorable than being taxed on the full amount as business income.
However, if your trading activity is frequent, substantial, and conducted with a business-like approach, the CRA may classify it as business income. In this scenario, 100% of your trading profits are taxable at your marginal tax rate. The CRA considers several factors when determining the nature of your trading activity, including:
- Frequency of trades
- Duration of holdings
- Time spent on trading activities
- Intention to earn a profit
It's important to note that you cannot choose how your trading income is classified; the CRA makes this determination based on the specifics of your trading behavior.
2. Capital Gains vs. Business Income
Capital Gains:
- Only 50% of the gain is taxable.
- No deduction for trading-related expenses.
- Losses can only be used to offset capital gains.
- Reported on Schedule 3 of your T1 General tax return.
Business Income:
- 100% of the gain is taxable.
- Eligible to deduct trading-related expenses (e.g., software, internet, education).
- Losses can be used to offset other income.
- Reported on Form T2125 (Statement of Business or Professional Activities).
3. Example: Capital Gains Tax Calculation
Suppose you earn $20,000 in Forex trading profits, and the CRA classifies your activity as capital gains. Only 50% ($10,000) is taxable. If your marginal tax rate is 30%, you would owe $3,000 in taxes on these gains.
4. Reporting Forex Income
All Forex trading income must be reported in Canadian dollars. Use the Bank of Canada's exchange rate on the date of each transaction to convert foreign currency amounts.
- Capital Gains: Report on Schedule 3 of your T1 General tax return.
- Business Income: Report on Form T2125, which is part of your T1 General tax return.
5. Foreign Trading Accounts
If you hold Forex trading accounts outside of Canada, you must declare them to the CRA by filing Form T1135 (Foreign Income Verification Statement) if the total cost of all foreign property exceeds CAD 100,000 at any time during the year.
Important
Failure to report foreign assets can result in significant penalties.