A Useful Guide to Canadian Forex Brokers and Tips for Finding the Best Ones

Canadian Forex BrokersForex trading has taken the world of small time investors by storm. Today, there are thousands of ordinary people who spend time and energy predicting the movements of the foreign currency markets. There are, of course, varying degrees of success. But talk to any investor and they’ll agree that one of the most important decisions they were faced with was choosing the best Forex brokers. When it comes to forex brokers in Canada, there are a number of possibilities. But first and foremost, any Canadian Forex trader should choose a Canadian Forex broker that is licensed and regulated by the IIROC (Investment Industry Regulatory Organization of Canada). However, there are also rules and regulations that are enforced on a provincial level. For example, the Ontario Securities Commissions covers the Toronto region, The British Columbia Securities Commission covers areas around British Columbia, and the Autorité des Marchés Financiers which covers the French-speaking Quebec and Montreal areas. The federal regulations imposed by the IIROC do take precedent, but this still leads to a very confusing situation.

Finding the best Forex brokers in Canada isn’t really the easiest of tasks. The lack of a national securities regulator for the interbank forex market and the trading of Forex online, has led to a very confusing situation for both new and experienced traders.

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The current state of play for those looking to trade Forex in Canada

It seems that the various regulating bodies have woken up to the fact that their rules are very confusing and are endeavoring to harmonize their efforts by devising a new set of regulations for top Forex brokers in Canada to follow, as well as guidelines on how the business of Forex trading should be conducted. There are new developments we have to discuss, with you our readers, as they have a direct bearing on Canadian Forex brokers and therefore their clients.
It appears that there was initially a lot of confusion relating to the various provincial classifications for currency trading. Was it derivative trading as they believed it was in Quebec? Or were Ontario and British Columbia correct when they classed Forex as a security? The IIROC have come to the rescue by providing a harmonized set of rules.

What are the rules for Canadian Forex brokers?

The first and foremost rule for new Forex traders is that all Forex brokers offering their services to Canadian citizens and residents of Canada, have to be registered as members of the Investment Industry Regulatory Organization of Canada (IIROC). The various provinces have come to a consensus of opinion that brokers offering Forex trading come under the heading of investment dealers, and as such are required to be members of the IIROC. There are a number of regulations the IIROC have introduced in order to protect the interests of the Forex trader.
IIROC members are required to set margins at 18:1. Which is much higher than the US margin rates of 50:1 offered by American Forex brokers. This means bad news for the Average Joes of the Canadian Forex trading world. Because, it means that Forex traders in Canada now need a minimum of $250,000 to gain entry to Canadian Forex brokers trading platforms.
Provincial regulators have added a number of other prospectus and qualifying requirements. Top Forex brokers in Canada have to certify their salespeople with regards proficiency in trading Forex contracts. In other words, any one selling Forex to the public must be qualified to do so and be able to prove it.
There are a number of other stipulations relating to portfolio managers, PAMM account managers, and Forex firms offering hedging services. But basically, anyone offering these services should be qualified to do so, as well as belong to a brokerage firm that is a member of the IIROC.

What does this all mean for Canadian Forex traders?

The new regulations are causing a bit of a furor, and have been cited as the reason for many Canadian Forex traders choosing brokers located in offshore locations. However, this is an unwise move to make as the new rules are designed to ensure maximum security of traders funds, and that only those with the right amount of money are risking it in such a high risk speculative investment as the Forex market. A number of Forex brokers in Canada have already adjusted to the regulations. If you want the best Canadian Forex broker to invest with you can check the database of the IIROC online.

Tips for finding the best Forex brokers in Canada

You should now appreciate the importance of only picking IIROC members, when you’re looking for top Forex brokers in Canada. However, once you’ve got a short list of possible contenders there are a number of other factors to consider, before making your final choice.
Security and safety – If your list includes only those Forex brokers in Canada who are members of the IIROC then you’re already off to the best possible start. Because of the strict rules, regulations and guidelines currently imposed on the best Canadian Forex brokers you can feel confident they know exactly what they are doing as well as being appropriately funded and capitalized to cover such risky investments. And its not just the safety and security of your money that should be an important concern. Personal information and financial details must be encrypted. The highest protection is offered by Multiple Layer SSL Encryption, so check the small print on the broker’s site to ensure your details are covered.
The cost of trading – Any charges and fees levied by the broker are going to eat into your profits so it’s vital you choose a broker that keeps these as low as possible. The most common way for brokers to make their money is by way of the spread (the difference between the buy and sell price of a currency). Therefore, you should be looking for one that offers the tightest spreads. Generally, there is a section that will explain any additional charges so you’d be wise to read these carefully and take them into account.
Choice of accounts – When you first start trading it is highly likely your trading capital is going to be limited. And we’d definitely advise you to consider risking as little as possible in the beginning. However, the introduction of margin rates means your options are rather limited. Beginners, are going to be better off starting their trading with a demo account. Which will give ample opportunity to test strategies and trading plans before risking real money.
Payment methods – At some point in time you’re going to be looking for a way to make payments. Initially, it will be a deposit you have to make, but hopefully in time, you’ll be wanting to withdraw some of your profits. It’ll be perfect if the Canadian FX broker will let you do both in Canadian dollars. It will be far better for your peace of mind if you are able to make payments in the currency of your own country. Rather than worrying about prevailing exchange rates.
Canadian FX broker bonuses – Both experienced and new traders should seriously consider increasing their trading capital with the help of a Forex bonus. Not every broker makes them available, but there are plenty that do. We’ll feature some of the best ones we encounter when writing our Forex broker reviews, and if you keep an eye out online it’s very likely you’ll uncover plenty of others. One piece of advice we always share in relation to these free money offers is to spend some time reading the terms and conditions. These are what often trip traders up, and you can find yourself unable to make any withdrawals if the bonus requirements haven’t been carefully followed.
Customer service and support – Once in a while you may find yourself in need of a helping hand from your broker, and you’d hope they can offer it right when you need it. It is also going to be very helpful if the customer support staff are fluent in English and French. So your top Canadian Forex brokers should include 24 hour support, multilingual support staff and a variety of ways you can get in touch. Take a look at the educational material that’s available, as Forex trading is a never ending journey and there is always going to be something new to learn.
Reliable and trustworthy – Wouldn’t you rather hand your money over to an FX broker with an excellent reputation for honesty and reliability? Rather than some fly by night firm that is promising the earth but has nothing to show for its reputation. Of course you would and it’s so easy to find out about a broker’s reputation you’d be mad to choose anything less than the best. There are countless Forex review sites, aside from ours, where you can read all about a broker’s service, and how their customers feel. You can also register with an online Forex trading forum and take part in conversations, as well as ask for advice.

Can we recommend the best Forex broker in Canada?

Sadly, we can’t. Choosing a Forex broker in Canada, or anywhere else in the world is a very personal choice. Every trader will have their own set of criteria, so it would be impossible to name a broker that will tick everyone’s boxes. What we can do is share a few examples and keep writing our Forex broker reviews, in order to keep all our readers informed and up to date. At the end of the day it is your choice and yours alone. We can only hand out some advice and give you guidelines on what to look for. Let’s go over one last time a few of the important aspects you should be considering.

Finding a top Canadian FX broker isn’t as easy as you think. And you are certainly going to find it a lot more difficult than residents in many other countries. But if you spend some time weighing up the pros and cons of anyone offering Forex trading services in Canada you’ll soon find the right broker.