Day trading means buying and selling within the same day, or holding for very short periods, to profit from small price moves. This page covers the rules for day trading in Canada, how the CRA decides whether your profits are business income or capital gains, trading inside a TFSA, and what active traders look for in a broker. To compare brokers generally, see the online broker comparison.
Rules for day trading in Canada
- No pattern day trader minimum. Canada has no rule like the former US pattern day trader rule, which required a US$25,000 minimum balance for frequent day traders. FINRA replaced that rule with intraday margin standards effective June 4, 2026, and US brokers have until October 20, 2027 to make the switch.
- Settlement is 1 business day after the trade for most stocks and ETFs, which matters when you trade with unsettled funds in a cash account.
- Margin and short selling require a margin account; registered accounts cannot borrow or short.
- Broker requirements for margin, options approval and account size vary; each broker sets its own on top of regulatory minimums.
Business income or capital gains
The tax treatment is the most important decision day traders face, and the CRA makes it on the facts of each case.
| Factor the CRA considers | Points toward business income | Points toward capital gains |
|---|---|---|
| Frequency of trades | Many trades, daily or weekly | Occasional trades |
| Holding period | Minutes to days | Months to years |
| Knowledge and experience | Specialised trading knowledge | General investor |
| Time spent | Substantial time each day | Little time |
| Financing | Trades on margin or borrowed money | Own savings |
| How you present yourself | As a trader | As an investor |
| Treatment | How much is taxed | Losses |
|---|---|---|
| Business income | All of the profit, at your marginal rate | Deductible against other income |
| Capital gains | Half of the gain | An allowable capital loss is applied first against your taxable capital gains of the same year. What is left (a net capital loss) can reduce taxable capital gains in any of the three years before, or in any future year. A net capital loss usually can only be applied against taxable capital gains, not other income. |
Because there is no bright-line rule, frequent traders keep full records of every trade and of trading costs such as data subscriptions and software, which are deductible if the activity is a business. The capital gains tax calculator covers how capital gains are taxed if your trading is treated as investing.
Day trading in a TFSA
A TFSA shelters investment income, but not business income. If the CRA decides a TFSA is carrying on a business of trading, the business income earned in it is taxable. The TFSA’s tax-free status is designed for investing, which is why frequent short-term trading inside one draws scrutiny.
What active traders look for in a broker
| Feature | Why it matters | Examples |
|---|---|---|
| Per-trade cost | Adds up across hundreds of trades | $0 stock trades at Questrade and Wealthsimple; per-share pricing at Interactive Brokers ($0.01/share, $1.00 minimum) |
| ECN and exchange fees | Can apply to orders that take liquidity | Questrade charges ECN fees only on some US orders (direct-routed, OTC and overnight-session) |
| Market data | Streaming quotes and Level 2 depth | Questrade: Level 1 streaming free, Level 2 US$44.95/month |
| Order types and platform | Speed, hotkeys, advanced orders | Desktop platforms such as Questrade Pro and IBKR’s Trader Workstation |
| Margin rates | Cost of borrowing | Wealthsimple lists 4.95% (CAD, Core tier); others publish their own schedules |
| Options fees | Per-contract charges | See the options trading platforms comparison |
Newer apps such as Moomoo and Webull also target active traders with charting and extended-hours trading.
The risks
Day trading concentrates risk: positions are often leveraged, decisions are made quickly, and costs recur on every trade. Losses can exceed the money in the account when margin is used. Practising in a paper-trading account first shows how a strategy performs without risking money. For most long-term goals, a diversified buy-and-hold portfolio is the approach the rest of this site covers, starting with investing for beginners.
Sources
The figures and rules on this page come from these sources, last checked against them between September 25, 2026 and October 1, 2026. How we check facts.
- BMO InvestorLine: T+1 (New Trade Settlement Date) FAQs
- Canada Revenue Agency: Capital Gains – 2025
- interactivebrokers.ca: Commissions Stocks | Interactive Brokers Canada Inc.
- questrade.com: Trading Fees & Commissions | Questrade Pricing | Questrade: Tilt finance in your favour