Day trading in Canada Vs US

Discussion in 'Professional Trading' started by snoop101, Dec 30, 2006.

  1. snoop101


    Starting in Feb i'll be trading full time from home. A lot of people talk about trading from home on here, but is there anything different trading in Canada over the US. Examples taxes (I understand that you pretty much run it like a business), day trading the TSX vs Nasdaq and NY, etc.

    Canadian day traders feel free to give me some tips or tricks you have.
  2. The main thing about self-directed daytrading in Canada(through a Canadaian broker) is that one can daytrade with less than $25k, unlike in US where daytrading with under $25k is restricted(crippled) by PDT(pattern daytrader) rule.
    Questrade and Tradefreedom are the most popular direct access brokers in Canada (IB Canada is limited by PDT).
    But due to the more competition among brokers, Day Trading commissions in US are usually lower than those in Canada.
  3. Just for interest's sake, why are you interested in daytrading the Canadian markets as opposed to the far more liquid markets south of the border? Does it have to do with the PDT requirements in the U.S.?
  4. BenChi


    DynamicHedge can you clarify? Does PDT not apply to US markets because we are trading from canada (IB is the exception?), or are you referring to the TSX- PDT does not apply to the TSX?


  5. Chagi


    I looked into this a fair bit as well, and my understanding is that PDT does not apply to most Canadian brokerages. IB is an exception, and I believe that is due to their method of clearing.

    Also, PDT rules are a regulatory thing in the US, not an exchange-specific issue.
  6. Joab


    If the PDT rule is not an issue for you I recommend setting up an LLC in Nevada and trading through it.

    Will give you all the answers you need.
  7. thats bs. unless you live in nevada you can't file your taxes there. the old scam of opening a p.o. box or a sham small office and then claiming las vegas as your residence to avoid your own states income tax is very very dangerous.
  8. ibalz


    With the plan on being profitable, as a Canadian trader, I would trade US markets to get my paycheck in USD.

    The downside is, your tuition (if your like most people starting out) will be in USD as well.


  9. If you do not have $25,000...
    Then trading for a living is not an issue at all...
    Unless ya gonna be a Prop Serf.

    When I started in the early 90s...
    They would not allow you to be a Competitive Options Trader in Futures Pit at the TSE...
    Unless you had $50,000... for this exact reason...

    And when I moved on to US stocks in 1994...
    I still considered $50,000 to be an absolute minimum for "trading for a living"...
    (I'm now into 7 figures... so maybe I actually know a few things).

    Adjusted for inflation... that is $80,000 minimum today.

    It harder to make money today than in mid-90s...
    The markets are MUCH, MUCH more efficient.
    So make it $100,000 US for one trader.

    Being undercapitalized causes serious problems:

    (1) You will have to take more risk... bringing Gambler's Ruin into play.

    (2) Your office/living expenses will eat away at your capital.

    (3) You will have to do everything on the cheap and 3rd class...
    From your trading infrastructure... to your accounting and tax filings.

    Of course...
    No one will listen to me...
    And the LEMMINGS will group into a tight, desperate, screaming herd...
    Before rushing headlong over the cliff to crash into the raging sea.
  10. PDT is a US SEC rule, so it applies to companies that are within SEC jurisdiction(inside the United States of America).
    Canada is outside of USA SEC jurisdiction, therefore Canadian companies are not restricted by the PDT rule.
    IB is self clearing and IB Canada is subject to the PDT rule. I think the reason for this is that IB Canada clears through the US entity - IB LLC(USA), which is subject to the PDT rule.
    There is no PDT rule for the TSX.
    Through all Canadian brokers, one can trade both US and Canadian markets, while most US daytrading brokers allow daytrading only for US stock markets.(IB is an exception, but IB is limited by PDT, $10/month mandatory activity fee and IB does not pay interest on the first $10,000 in your account)
    #10     Dec 30, 2006