How to Trade Successfully in the Canadian Markets?
Not just about the great outdoors, but Canada is also famous for its strong and diverse economy. The country is fully-fledged with an extensive range of natural resources which drive its exports.
Eventually, it turned Canada into the world’s ninth-biggest economy. The Toronto Stock Exchange (TSX) has listed a maximum number of gas, oil, and mining companies than any other stock exchange.
Canada is an ocean for newbies and professional investors. They can purchase various bonds and stocks in different ways. Also, investors can learn the ropes of Canadian stocks and bonds with the help of exchange-traded funds (ETFs) and American depositary receipts (ADRs).
Key takeaways if you’re new to Canadian markets:
- Canada provides a profitable investment opportunity due to its strong core economy.
- Investors will hugely benefit from Canada due to its diverse natural resources, low budget deficits, and stable inflation.
- Investors can invest in different ways in Canada that includes – ETFs, direct purchase stocks and bonds, and ADRs.
Country’s Top Trading Partner
This section is essential for you if you’re in your infancy with Canadian markets. Canada’s trade fund for goods and services was around CAD$1.8 billion in deficit ($1.41). According to official numbers, total imports were CAD$50.9 billion. Canada’s three primary trading partners for imports and exports of goods and services in 2020 were China, the U.S., and the U.K.
Major Canadian Industries
| Industry Name | Contribution to GDP in 2020 ($CAD Billion) | Number of People Employed (Million) |
| Manufacturing | 178 | 1.50 |
| Mining, Quarrying, and Oil and Gas Extraction | 144 | 0.19 |
| Construction | 137 | 0.96 |
| Healthcare and Social Assistance | 131 | 1.30 |
| Finance and Insurance | 143 | 0.73 |
| Professional, Scientific, and Technical Services | 116 | 0.95 |
| Educational Services | 99 | 1.3 |
| Wholesale Trade | 99 | Employment figure not represented in the data source |
A Comprehensive Guide to Trade in Canada
Investing in the right stocks can make or break profits while trading. If you’re ready to get started but not sure how to, then don’t worry, we have got you covered. Investing in the Canadian stock market is easier than before.
However, you need to learn the ropes if you’re starting from scratch. If you’re wondering how to trade in Canada, here’s a step-by-step guide – how to trade successfully in Canadian stock markets.
1. Apply for an Online Brokerage Account
There are hundreds of excellent online trading platforms for DIY investors where they can buy and sell stocks themselves without relying on a broker to execute transactions. Every Canadian bank has its brokerage segment, and for many DIY investors, it can be a convenient way to get started on their own.
Initially, if you want to go cost-conscious, you can also try low-cost brokerages, such as Wealthsimple trade and Questrade.
Signing up is simple, you just have to go on a link and add important details to activate your account. If you’re using Questrade, you’ll get $50 in free trades. Wealthsimple trade is also a convenient option, and it doesn’t take away any commissions if you buy stock or ETF trades.
2. Open a Tax-Sheltered Investment Account
You’ll also need to activate your Tax-Sheltered Investment Account. To break this into simpler terms, let’s understand the term “Tax-sheltered investment first.
A Tax-sheltered investment is a type of portfolio or asset that is strategized to reduce your income tax liabilities legally. You also need to figure out whether to invest in an RRSP, TFSA, or non-registered account.
RRSP is a Registered Retirement Savings Plan that you create, and to which you or your partner contribute. In simple terms, an RRSP is a savings plan in Canada where you can contribute to your retirement. The eligibility criteria for earning a contribution room in RRSP is that you must have a job and a business income.
The Tax-Free Savings Account (TFSA) started in 2009. The TFSA scheme is for individuals ages 18 or older in Canada. Your contributions, dividends, interest earned, and capital gains will be tax-free. Withdrawals are tax-free, so you can see your savings grow throughout your lifetime.
3. Analyze and Invest
Now that you have decided on what account to invest in, let’s do research before taking a call while investing in a stock. Stock analysis is a complex and wide-ranging topic divided into technical and fundamental analyses.
In fundamental analysis, an investor utilizes the company’s data to know about its financial health, growth potential, and intrinsic value. You can determine a company’s growth potential through its financial statement (income, cash flow, and balance sheet statements).
Technical analysis is what most experienced investors do. It involves the use of a company’s chart and historical price patterns through which they can forecast a stock’s price in the future.
If you’re a beginner, start with the fundamental analysis technique. Understand the company’s USP and vision.
