how do you buy stocks in canada

This guide explains how do you buy stocks in canada: which exchanges and account types to use (TFSA, RRSP, FHSA, RESP), how to choose a brokerage, step-by-step trade execution, fees, taxes, and pra...

2025-09-02 06:29:00

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How do you buy stocks in Canada

If you searched “how do you buy stocks in canada,” this guide will walk you through the complete process in clear, beginner-friendly steps. You’ll learn what stocks are, the main Canadian exchanges, the account types (TFSA, RRSP, FHSA, RESP), how to choose a brokerage, the exact steps to place your first trade, order types, fees and currency issues, tax reporting, alternatives (ETFs, mutual funds, robo-advisors), and practical checklists and FAQs. By the end you should know how to start buying and managing stocks in Canada while understanding costs and risks.

Note: this article is informational and not investment advice. Verify platform-specific details, fees and tax rules with your broker and a licensed tax professional before acting.

Overview of the Canadian stock market

Canadian stocks are equity securities that represent ownership in companies listed on public exchanges. If you’re asking "how do you buy stocks in canada," it helps to first understand where Canadian stocks trade and what kinds of companies list locally.

Toronto Stock Exchange (TSX): The TSX is Canada’s primary senior exchange where large-cap and mid-cap companies list, including major banks, energy, mining and industrial firms. Market structure supports large institutional and retail trading.
TSX Venture Exchange (TSXV): The TSXV is a junior exchange that lists smaller-cap, early-stage resource, technology and growth companies. Volatility and risk tend to be higher on the TSXV.
Canadian Securities Exchange (CSE): The CSE lists micro-cap and growth companies with a focus on cost-effective listings; it has become popular for certain sectors.

Canadian brokerages also provide access to U.S. and other international markets, so when you buy stocks as a Canadian resident you can choose domestic-listed shares or U.S.-listed equities (Apple, Amazon, etc.) through your broker.

As of June 1, 2024, according to Questrade’s educational pages, most Canadian self-directed brokerages support trading on TSX, TSXV, CSE and U.S. exchanges via registered and non-registered accounts.

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Types of investment accounts in Canada

Choosing the correct account is one of the first steps if you want to know how do you buy stocks in canada. Different accounts affect taxes, contribution limits and eligibility for holding stocks.

Registered accounts (TFSA, RRSP, FHSA, RESP)

TFSA (Tax-Free Savings Account): Contributions are after-tax; investment growth and withdrawals are tax-free. Many Canadians use a TFSA to hold stocks and ETFs for long-term, tax-free growth. Contribution room is limited annually and unused room carries forward.
RRSP (Registered Retirement Savings Plan): Contributions are tax-deductible and grow tax-deferred; withdrawals are taxed as income. RRSPs are commonly used to hold stocks and ETFs for retirement savings. Contribution limits depend on earned income and carry-forward rules.
FHSA (First Home Savings Account): FHSA combines RRSP-like contribution deductions with TFSA-like tax-free withdrawals if used for a first home purchase (rules apply). It can hold stocks and ETFs while you save for a home.
RESP (Registered Education Savings Plan): Designed for education savings, RESP contributions grow tax-deferred and may attract government grants; withdrawals for education are taxed in the student’s hands. Stocks and ETFs can be held in RESP accounts.

Registered accounts shield investment growth from year-to-year taxation (TFSA: tax-free; RRSP: tax-deferred), changing where you might place dividend-paying stocks or foreign investments because of withholding rules (see Taxes section).

Non-registered (taxable) accounts and margin accounts

Non-registered (taxable) account: No tax shelter; capital gains and dividend income must be reported and taxed annually. Non-registered accounts provide flexibility in withdrawals and contribution timing.
Margin accounts: Margin allows borrowing against holdings to increase buying power. Margin can magnify gains but also losses and may lead to margin calls. Brokers charge interest on margin loans, and rules depend on the broker and regulatory limits.

Investors often keep retirement and long-term holdings in TFSA/RRSP and use non-registered or margin accounts for trading, income strategies or short-term needs. Always understand margin requirements and the risk of leverage before using it.

Choosing a brokerage

A core part of “how do you buy stocks in canada” is deciding which brokerage will execute your trades. Brokers differ by cost, tools, market access and service model.

Types of brokers

Large-bank brokerages: Full-featured platforms tied to major banks (e.g., TD Direct Investing, RBC Direct Investing, BMO). They provide strong research, branch support and integrated banking relationships; typically higher commissions or account fees for full-service features.
Discount / self-directed brokers: Lower-cost platforms focused on DIY investors (e.g., Questrade, Scotia iTRADE). They often offer competitive commissions, advanced trading tools and broad market access.
Robo-advisors: Automated services that build and manage a diversified portfolio of ETFs for a management fee (e.g., Wealthsimple). Good for hands-off investors who prefer automatic rebalancing and low-touch management.
Full-service advisors: Human financial advisors provide personalized planning and active management, charging advisory fees or commissions. Suitable for investors seeking comprehensive advice.

Key selection criteria

When evaluating how do you buy stocks in canada through a broker, consider:

Fees and commissions: Per-trade commissions, account fees, inactivity fees and ETF transaction fees.
Access to markets: TSX/TSXV/CSE, U.S. exchanges and other international markets.
Currency handling and conversion costs: If buying U.S.-listed stocks you may face currency conversion fees unless you hold a USD account at your broker.
Platform usability: Mobile and desktop platforms, order entry experience, research tools and charting.
Order types supported: Market, limit, stop orders, extended-hours trading, fractional shares availability.
Regulation & investor protection: Look for registration with provincial securities regulators and membership in Canadian Investor Protection Fund (CIPF) or applicable protection schemes (and CIRO oversight where relevant).
Customer support: Phone, chat, email and branch access if needed.

Examples of Canadian providers (illustrative)

Representative providers commonly referenced by Canadian investors and industry sources include Questrade, TD Direct Investing, RBC Direct Investing, Scotia iTRADE, BMO InvestorLine, Wealthsimple, and BMO. These serve as examples of the different broker types above and help illustrate real-world trade flows and fee schedules. As of May 15, 2024, Savvy New Canadians and WealthProfessional guides reported that discount brokerages like Questrade have grown market share among DIY investors due to lower fees and competitive tools.

Step-by-step process to buy stocks in Canada

Below is a practical step-by-step process explaining how do you buy stocks in canada — from planning to settlement.

1) Define goals and risk tolerance

Before opening accounts or placing trades, define your investment horizon (short, medium, long), capital to invest, income needs, and risk tolerance. Decide whether you want growth (capital appreciation), income (dividends), or a mix. Your goals determine account choice, asset allocation and whether to buy individual stocks or ETFs.

2) Open and verify an account

Choose the account type (TFSA, RRSP, FHSA, RESP, non-registered) and broker based on the criteria above.
Typical online account opening requires identity documents (driver’s license or passport), Social Insurance Number (SIN) for registered accounts, personal information and sometimes funding proof. The verification process is usually electronic and can take a few hours to a couple of business days depending on the broker and required documentation.
Select whether you want a CAD or USD base currency (many brokers let you hold both). If you plan to trade U.S. stocks often, a USD account can reduce conversion costs.

3) Fund your account

Common funding methods:

Electronic funds transfer (EFT/Interac e-Transfer): Usually fastest for small to moderate amounts.
Bank bill payment or pre-authorized debit (PAD): Available at many brokers.
Transfer-in of securities (ACAT or equivalent): Move an existing brokerage account or registered plan; may incur transfer fees and take longer.

Funding timing varies: EFTs often clear in 1–3 business days, while transfer-ins can take multiple weeks. If buying U.S. stocks, consider currency timing and conversion fees.

4) Research stocks and create watchlists

Use broker research tools, company financial statements, news, analyst reports and screening tools to build a watchlist. For beginners, compare fundamentals (revenue, earnings, debt), dividend history, valuation metrics (P/E, price-to-book), and industry trends. Technical charts can help with timing but are more relevant for active traders.

Consider ETFs as an alternative for instant diversification. Many investors build a core ETF position and add individual stocks selectively.

5) Obtain a quote and choose an order type

Before placing a trade get a real-time quote (current bid/ask and last trade). Choose an order type appropriate for your goal:

Market order: Execute immediately at the best available price; use when immediacy matters, but price can vary.
Limit order: Specify the maximum buy price (or minimum sell price); executes only at the limit price or better.
Stop order (stop-loss): Becomes a market order when a trigger price is hit—used to limit losses.
Stop-limit: Becomes a limit order when the stop price is triggered.
Trailing stop: Stop price moves with the market by a fixed amount or percentage.

Note: Extended-hours/pre- and post-market trading availability differs by broker and may have different liquidity or pricing.

Fractional-share availability: Some brokers allow fractional shares, which lets you buy partial shares of expensive U.S. or Canadian stocks. Availability varies.

6) Place the trade and confirm execution

Enter the order on your broker’s platform, review order details (ticker symbol, account, number of shares, order type, time-in-force). After submission you’ll receive an order status (accepted, working, filled, partially filled). A trade confirmation (electronic) will show execution price, fees and quantity.

7) Settlement, recordkeeping and monitoring

Settlement: In Canada and the U.S., most stock trades settle on a T+2 basis (trade date plus two business days). During settlement you do not yet own transfer-restricted rights but will see the position in your account immediately for most practical purposes.

Recordkeeping: Keep trade confirmations, annual statements and any tax slips (T5s) for tax filing. Monitor positions for corporate actions, earnings releases and dividends.

Order types and trading mechanics

Common order types and mechanics when learning how do you buy stocks in canada:

Market order: Fastest but can suffer from slippage in low-liquidity stocks.
Limit order: Control price, may not execute if price doesn’t reach the limit.
Stop/stop-limit/trailing stop: Tools to manage downside or lock in profits.
Time-in-force: Day orders expire at market close; Good-Til-Cancelled (GTC) may remain open for longer (broker-specific rules apply).

Advanced orders: One-cancels-another (OCO), bracket orders and conditional orders may be available on advanced platforms. Availability differs across brokers.

Pre/post-market trading: Some brokers provide extended hours trading on U.S. exchanges; liquidity and pricing can be unpredictable.

Partial/fractional shares: Useful for dollar-cost averaging into high-priced stocks; check broker availability and rules for fractional trades.

Costs, fees and currency issues

Understanding fees is critical to answering "how do you buy stocks in canada" because costs affect net returns.

Typical fee components

Commissions: Per-trade fees charged by some brokers; many brokers now offer commission-free trades for Canadian and U.S. stocks/ETFs but check exceptions.
Currency conversion fees: When buying U.S.-listed stocks from a CAD account, brokers convert CAD to USD and often charge a markup or forex fee (commonly 1–2% of the transaction). Holding a USD account can reduce repeated conversion costs.
Spread: The difference between bid and ask; relevant especially for low-liquidity stocks.
ECN/clearing fees: Small regulatory or exchange fees may apply per trade.
Account fees: Inactivity or account maintenance fees at some brokers.
Margin interest: Interest charged on borrowed funds in margin accounts; rates vary by broker and loan size.

Minimizing fees

Use commission-free brokers for stocks and ETFs where available.
Hold U.S. stocks in a USD account to avoid repeated CAD↔USD conversions; convert only when needed.
Choose CAD-quoted ETFs when appropriate to avoid foreign currency costs.
Watch for hidden fees like transfer-out or broker-assisted trade fees.

As of May 20, 2024, TD Direct Investing and BMO educational pages stressed that understanding currency conversion and CAD-quoted alternatives is essential to minimize costs when buying U.S. securities from Canada.

Taxation, reporting and regulatory considerations

Tax and regulatory rules are central to "how do you buy stocks in canada" because they determine after-tax returns.

Capital gains and dividends

Capital gains: Realized capital gains (sale proceeds minus adjusted cost base) are taxable in non-registered accounts. In Canada, 50% of realized capital gains are included in taxable income. Capital losses can offset gains.
Dividends: Canadian dividends receive a dividend tax credit and are taxed preferentially compared to interest income. Eligible vs non-eligible dividend treatment depends on the company type.

Registered account tax rules and withholding

TFSA: Growth and withdrawals are tax-free; however, foreign withholding tax on dividends (e.g., U.S. dividends) may apply and is not recoverable in a TFSA.
RRSP: Dividend and capital gains grow tax-deferred; U.S. dividends in an RRSP are generally exempt from U.S. withholding tax under the Canada-U.S. tax treaty (subject to proper account designation), but other foreign withholding rules may apply.
RESP/FHSA: Specific rules govern withdrawals and grant treatment; consult account rules for tax treatment.

Foreign withholding: When you hold foreign dividends (U.S. or other countries) in a non-registered account, foreign withholding tax typically applies (e.g., 15% for U.S. dividends to Canadian residents). Withholding rules differ by country and account type. Consult a tax professional for personalized guidance.

Reporting and documentation

T5 slips: Brokers issue T5 and similar slips reporting investment income for tax filing.
Annual statements: Brokers provide annual activity and cost base reports to help with tax reporting.
Capital gains reporting: Keep records of purchases, sales and adjusted cost base (ACB) for accurate tax reporting.

Regulation and investor protection

Brokers and advisors in Canada are regulated by provincial securities commissions and self-regulatory organizations. Investor protection includes entities such as the Canadian Investor Protection Fund (CIPF) which may protect client assets at member firms in the event of broker insolvency, up to specified limits. Confirm your broker’s regulatory registrations and protection arrangements.

Buying U.S. and international stocks from Canada

When you want to buy U.S. or other international stocks, pay attention to currency, settlement and tax details.

Currency conversion: Decide whether to hold USD balances at your broker. Repeated CAD↔USD conversions on each trade can add costs; a USD account with the broker can reduce conversions.
Cross-border settlement: Brokers route orders to U.S. exchanges and handle settlement; verify whether your broker offers direct market access to the U.S. or trades through intermediaries.
Tax and withholding: U.S. dividends to Canadian residents are typically subject to U.S. withholding tax of 15% for registered accounts like RRSPs when treaty benefits apply; non-registered accounts face withholding and may receive foreign tax credits.
Accessibility: Most Canadian brokers provide direct access to major U.S. exchanges; check availability of specific foreign markets before planning trades.

Alternatives to buying individual stocks

If you’re learning how do you buy stocks in canada and want lower effort or broader diversification, consider these alternatives.

Exchange-Traded Funds (ETFs)

ETFs pool investments and trade like stocks, offering instant diversification across sectors, regions, or strategies. ETFs usually have low management fees (expense ratios) and are popular for core portfolio holdings.

Mutual funds and index funds

Mutual funds (active or index) provide professional management. Index mutual funds track benchmarks and often have lower fees than active funds. Mutual funds may have minimum investments and management fees higher than many ETFs.

Robo-advisors and managed portfolios

Robo-advisors build and manage ETF-based portfolios for a management fee (often 0.25%–0.7% plus ETF fees). They handle asset allocation, rebalancing, and tax-loss harvesting in some cases—suitable for hands-off investors.

Dividend reinvestment and corporate actions

Dividend Reinvestment Plans (DRIPs): Many brokers offer DRIPs which automatically reinvest dividends into additional shares, often without commission. DRIPs are useful for compounding returns over time.

Corporate actions: Stock splits, buybacks and mergers can affect holdings. Brokers typically notify clients of corporate actions and apply changes to account positions. Monitor communications and read notices to understand share adjustments and any election choices.

Risk management and investment strategies

Diversification and asset allocation

Diversify across sectors, geographies and asset classes (stocks, bonds, cash) to manage risk. Align allocation with time horizon and risk tolerance.

Long-term investing vs active trading

Long-term (buy-and-hold): Lower transaction costs and simplified tax planning; suitable for retirement and passive wealth building.
Active trading: Requires time, discipline and fee awareness; frequent trading can increase costs and taxable events.

Common pitfalls

Emotional trading: Avoid buying or selling based on short-term market noise.
Overconcentration: Don’t hold too much in a single stock or sector.
Neglecting fees: Fees compound over time and can erode returns.
Insufficient research: Understand business fundamentals before investing.

Tools, education and practice

Most brokerages provide research, screeners, educational articles and webinars. Demo or paper-trading accounts (where available) let you practice order entry without risking capital. Independent resources, company filings and industry reports complement broker tools.

Canadian brokers such as TD Direct Investing, Questrade, BMO and RBC offer learning centers and practice materials. WealthProfessional and Savvy New Canadians provide investor-focused guidance and strategy articles for beginners.

Practical checklist for first-time buyers

Define investment goals, horizon and risk tolerance.
Choose account type (TFSA, RRSP, FHSA, RESP, or non-registered).
Select a broker based on fees, market access and tools.
Prepare documents (ID, SIN, address) and open account.
Fund account (EFT, bill payment or transfer-in).
Research stocks or ETFs and build a watchlist.
Decide order type (market vs limit) and quantity.
Place first trade; confirm execution and retain trade confirmation.
Monitor holdings, set alerts, and keep tax records.
Review portfolio periodically and rebalance as needed.

Frequently asked questions (FAQ)

Q: How much money do I need to start buying stocks in Canada? A: You can start with small amounts at brokers that offer fractional shares or low minimums. Consider starting with an amount you can afford to leave invested and that aligns with commission or minimum trade rules. Many ETFs and commission-free brokers lower the barrier to entry.

Q: Do I need a broker to buy stocks in Canada? A: Yes. Individual investors buy listed stocks through licensed brokers or investment platforms. Robo-advisors are an alternative for indirect exposure.

Q: How do I buy U.S. stocks from Canada? A: Use a Canadian broker that provides access to U.S. exchanges. Decide whether to use a USD account to reduce conversion fees and be aware of U.S. dividend withholding tax and reporting.

Q: What tax forms will I receive? A: Brokers issue tax slips such as T5s for investment income and annual summaries of transactions. Keep records of cost base and trading activity for capital gains reporting.

Q: Can I transfer my existing brokerage account to a different broker? A: Yes. Brokers support transfer-in procedures (sometimes called ACAT or equivalent); watch for transfer fees and timeframes.

Glossary

Stock / Share: A unit of ownership in a company.
ETF (Exchange-Traded Fund): A pooled investment traded like a stock that tracks an index or strategy.
Limit order: An order to buy or sell at a specified price or better.
Market order: An order to buy or sell at the best available price.
T+2: Trade date plus two business days—standard settlement cycle for equities.
Dividend yield: Annual dividends per share divided by current share price.
DRIP (Dividend Reinvestment Plan): Plans that reinvest dividends into more shares.
Custody: Brokerage holding of client securities.
Settlement: The process of transferring securities and payment after a trade.
Spread: The difference between bid and ask prices.

Important notes and disclaimers

This article is for informational purposes only and does not constitute investment advice. Verify all platform-specific features, fees and up-to-date tax rules with your broker and tax authorities before taking action. Broker offerings and tax rules change over time; always confirm the current terms with the provider.

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