become a Day Trader In Canada
Home » How to Become a Day Trader In Canada in 10 Steps

How to Become a Day Trader In Canada in 10 Steps

Day trading is a form of trading that involves the purchase and trading of financial instruments in a day. It consists of buying and selling financial instruments on the same day while finalizing the business before the close of the market.

However, it would help if you didn’t trade without prior knowledge of it; you can learn how to become a day trader in Canada in the few steps in this prose.

Many Canadians are engaged in day trading because of its potential to bring a high return. In this article, you will learn about what day trading is, the types of orders in trading, how to become a day trader in Canada, and the difference between day trading and investing.

What is Day trading?

Day trading is lucrative trading that deals with buying and selling stocks to trade within that same day. It functions primarily based on price fluctuation, with the term “buy low and sell high.” Day trading is a liquid investment that can change dimensions quickly. It is about setting a particular time to buy stocks at a low price and targeting the best time to sell them off. It often demands knowledge, lots of luck, and experience.

Without a doubt, day trading is not for every investor; it is for individuals with nerves and the ability to take a risk. Because even if your investment increases in value, within a minute, it can also drop significantly.

Over the years, many investors have lost a fortune on day trading, while some have become extremely rich. So you need to know how to become a day trader in Canada so that it won’t end in tears!

Types of orders for day trading

You execute an order when you buy or sell a stock. You can do this conveniently using your online brokerage account. First, however, you have to choose the kind of orders you want to execute before you can go ahead to make the transaction.

Here are the types of orders for day trading:

#1. Limit order

A limit order is to sell or buy a stock at a reasonable price. A sell limit order can be executed at the limit price or higher; however, a buy limit order can be executed at a lower price than the amount.

#2. Market order

A market order is the fastest and most common type of order. It involves going through a brokerage to either buy or sell a security. Naturally, this transaction is done at the best price available in the current market.

#3. Stop order

This is also known as a stop-loss order. It is an order to sell or buy a stock once it is at a particular price. The specified price is also known as a stop price. So, a stop order will become a market order if the stock prices are attained.

Steps to becoming a day trader

Without a doubt, going into day trading requires a thorough understanding of the market and behavioral finance. It would help if you resisted embarking on Day trading without having enough knowledge of it. That is why we have a step-by-step guide on becoming a day trader in Canada below. So, keep following.

#Step one: Assess yourself

Without a doubt, the first step to becoming a day trader is to assess yourself to know if you’re fit for the task. This is because trading requires combining skills, traits, knowledge, and commitment to a lifestyle.

You should evaluate yourself to know your strengths and weaknesses to decide if entrepreneurship benefits you. Because day trading will require the following

  • Working for long hours
  • Having few holidays or leave from work
  • Self-improvement and continuous self-learning
  • Ability to take risks
  • Working with a positive mindset

Note that a positive mindset is essential to be a day trader. It would help if you were mentally prepared to take risks and suffer loss while you prepare to devote yourself to self-learning and take the risk for your business. You can check for materials and resources on trading to know more about accomplishing a self-assessment and doing well in day trading.

#Step two: Get adequate capital

Undoubtedly, extended and intermittent losses are part of the game. No one can expect to generate profits consistently, so you must have enough capital to handle this risk. You will almost certainly fail if you enter trading with a small amount of money. So, before settling for day trading, you should gather enough capital for the success of your business.

#Step three: Understand the market

The next step in becoming a day trader in Canada after getting sufficient capital is understanding the markets. You will need a good market foundation, from simple to intricate details. For instance, exchange trading hours and holidays, and the impact of news events, tradable instruments, and margin requirements. In other words, you must have a broad knowledge of trading.

#Step four: Have a sufficient understanding of securities

Mutual funds, futures, ETFs, and stocks all trade differently. Hence, you need to know the security’s characteristics and trading requirements because you can fail if you instigate a trading strategy without sufficient knowledge. For instance, you should understand how exercise or assignment of the position of option affects your trading plan or how margin requirements for commodities, options, and futures impact your capital.

Failure is inevitable if you don’t have quality knowledge about these things. So, it would help if you got to know about the trading of the securities you choose

#Step five: Set up a trading technique

If you are not an expert in trading, you should start by selecting not less than two established strategies. This is because the two will act as a backup in case there’s no opportunity to trade when you fail. However, as you gain more experience, you can move to more significant complexities with more strategies.

Even though the trading world is dynamic, it can fail anytime, even though you’re consistently making money for a long time. So you must keep a close eye on the effectiveness of the trading strategy you select and customize, substitute, dump, or adapt.

#Step six: Integrate Strategy and Plan

You should select not only the right trading strategy but also follow considerations that you need to complement the strategy to conclude a trading plan. You should know about

  • How the strategy will be used (entry/exit strategy)
  • Capital to be use
  • How much money per trade will be used
  • Which assets will be traded
  • How frequently to place a trade

#Step seven: Learn and exercise how to manage money

You need to practice money management because it will help you estimate your potential profitability and address some challenges. If you can manage money well enough, you will make more profit, even if they are only a few profitable trades. Therefore, structure, plan, and practice the trade according to your capital allocation plan and your proposed money management.

#Step Eight: Make research Brokerage Charges

A regular transaction may incur a high brokerage cost. So, you are to select a brokerage plan after thorough research. You can use a per-trade brokerage plan if you intend to trade once or twice a day. However, you should go for a staggered plan if you are trading on a high volume daily.

A broker will also offer trading utilities apart from trade execution. This includes trading platforms such as integrated trading solutions like historical data, optional combinations, trading alerts, trading software, and chatting applications with technical indicators.

We advise that you select the features that you need and subscribe likewise to prevent subscribing to the features that will not be useful.

#Step nine: Simulate and Backtest

The next step on how to become a day trader in Canada after researching brokerage charges is to stimulate and backtest. It would help to stimulate your plan on a test account with virtual money once it is ready. You can also utilize historical data.

#Step ten: Keep expanding

The last step in becoming a day trader in Canada is to start small and then subsequently expand. Note that even with sufficient experience and money, you shouldn’t play big on the first trade if you choose a new strategy. Instead, a smaller amount of money should always be used for a new strategy, after which you can increase the stake if the first try is a success.

Difference between Day trading and Investing

There are differences between day trading and investing. For example, you use strategic techniques to maximize short-term returns when you trade stocks. However, investing involves building a portfolio to help you attain long-term financial motives.

Unlike investors, a day trader will have to worry about market ups-and-down because they don’t hold a diversified portfolio of bonds, stocks, index funds, and exchange-traded funds. Of course, you can manage your investment portfolio and balance from time to time, but as a trader, you might not be able to achieve that with the same frequency.

See Also: How to Become a Notary Public in Ontario in 7 Steps

Frequently Asked Questions

What is the minimum amount of money to go into Day trading in Canada?

You can start trading with any amount. In other words, no minimum amount is specified for day trade stocks.

What is the best time to trade in Canada?

One of the best hours to trade in Canada is between 9:30 a.m. to 10:30 a.m. Eastern Time. This does not specify that it is the only ideal time to trade, but it offers the most significant move in a brief time.

What are the reasons why traders fail?

The primary reason why trade is making a loss is the lack of knowledge and experience in the Day stock market. Also, trading irrationally, having no trading plan, and setting goals that are not realistic are hazardous to Day trading.


Day trading is for individuals who have guts. Don’t go into trading if you are scared of losing a dollar because you won’t win at all times. Becoming a day trader is lucrative, but gaining experience, knowledge, and luck will help you succeed.

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