Copy Trading in Canada: All You Need to Know

Copy trading has grown in popularity among Canadian traders in recent years. This strategy allows you to replicate the positions of an experienced trader, increasing your chances of closing winning trades even without having vast trading experience.

Are you in Canada? We advise you to read this article before starting your copy trading journey.

Is Copy Trading Legal in Canada?

Before exploring the brokerage firms offering copy trading, it is important you find out whether this trading strategy is legal in Canada. Thankfully, all brokers regulated by Canada’s Investment Industry Regulatory Organization are allowed to support copy trading.

As for Muslim traders, it is worth mentioning that copy trading is halal as long as copied trades are executed by an Islamic trading account.

Five Steps to Follow to Ensure You Have a Seamless Copy Trading Experience

Trading becomes enjoyable when you are assured that your funds are safe. Here is what you need to do when selecting a broker that offers copy trading.

Check If the Brokerage Firm is Regulated

For the safety of your funds, we advise you to confirm that the broker you plan to register with is regulated by the Investment Industry Regulatory Organization of Canada (IIROC). This Canadian government agency oversees all trading and investment activities in the country. Therefore, your funds’ safety is guaranteed if a broker has secured a license from IIROC.

Check if the Broker is CIPF Approved

Canadian Investor Protection Fund ensures traders do not lose all their funds when their broker goes under, as it provides up to $1 million in insurance, which covers all trading accounts.

Compare Charges and Fees Imposed by Brokers

As newbies continue to adopt copy trading, brokers have found a way to collect extra fees from traders who use this strategy. So, it is crucial to find out which copy trading platform charges the lowest fees.

Put Broker’s Customer Service to the Test

Before signing up with a broker, we recommend shooting a question to its customer support team to gauge how long it would take to get a response. Avoid any broker that takes forever to attend to your issues.

Check the Terms and Conditions

Although reading a broker’s terms and conditions can be time-consuming, it can prove to be helpful, especially if you want clarification on certain aspects. This section covers various topics, including trading rules, deposits, withdrawals, and many more.

Top 5 Copy Trading Platforms in Canada

There are several brokers offering users in Canada access to copy trading. They include:

FP Markets: This broker lets you copy trade in the forex and stock markets. The minimum investment is $100.

Pepperstone: Canadian traders looking to use this broker for copy trading purposes must make a deposit of $200 or more. Financial instruments to copy trade include Forex, indices, and stocks.

FXPrimus: With a minimum deposit of $100, you can start copy trading Forex pairs, stocks, and indices on FXPrimus.

HYCM: This broker allows you to copy the same financial instruments as FXPrimus. You also need to invest $100 or more to get started.

ICM Capital: With this broker, you can copy trade over 100 stocks of the biggest companies, along with indices and Forex pairs. A minimum investment of $200 is required.

Factors to Consider When Selecting a Trader to Follow

The choice of your lead trader determines if you will be a successful copy trader or not. To select the right trader to follow, we recommend you consider aspects like the trader’s consistency in closing profitable trades and their risk level. Also, ensure the trader you wish to copy does not charge unreasonable commission. The goal is to retain most of the profits.

Is Copy Trading in Canada a Good Idea?

Copy trading is a good strategy for Canadian traders who lack the necessary skills to execute profitable trades. However, they must consider the risk involved. Copy trading can bring losses just like any other strategy.