Wealthsimple Trade is a relatively new platform in Canada. Wealthsimple Trade was publicly launched on March 2019. Wealthsimple Trade is a self-directed platform where people can manually trade individual stocks and ETFs.
In general, day trading on Wealthsimple may only be ideal when trading Canadian stocks and ETFs. Wealthsimple Trade charges $0 fees for Canadian dollar trades. On the other hand, Wealthsimple Trade charges 1.5% exchange rate fee to US dollars to trade US stocks and ETFs. In contrast, most big banks charge $9.95 per trade.
Wealthsimple trade does not offer leverage such as options trading or access to margin.
Day Trading using Wealthsimple Trade
| Advantages | Disadvantages |
| Platform is simple and easy to use. | No access to margin (cannot borrow additional funds) |
| Free commission trades when trading Canadian stocks and ETFs | Call and put options not available |
| Instant deposits of up to $1,500 | By default (free plan), stock prices are 15 min. delayed |
| 1.5% fee on US stocks is eliminated when you subscribe to a $10/month plan | 1.5% fee when trading US stocks and ETFs |
| Shorting stocks not available |
Number of Trades (PDT Rule)
PDT (Pattern Day Trading) Rule does not apply for platforms in Canada. However, TFSA and RRSP accounts are generally designed for medium and long term savings and may have a limit on the number of trades. A Personal account with Wealthsimple Trade may be best to day trade using Wealthsimple Trade since there is no limit on the number of trades (US and CAD stocks and ETFs), deposits, and withdrawals.
TFSA and RRSP accounts have a limit to the amount of contributions a person can deposit to these accounts. A Personal account is a non-registered account where there is no limit to the amount of deposits and withdrawals.
However, profits from day trading are taxable when gains are realized. Day trading profits are fully taxable to a tax rate similar to employment income while only 50% of profits are subject to capital gains.
Taxes on $10,000 of Profits from Stocks: Business Income vs Capital Gains
| Business Income (ex. Day Trading) | Capital Gains | |
| Profits | $ 10,000 | $ 10,000 |
| Taxable gains | $ 10,000 | $ 5,000 |
| Tax rate (example)* | 30% | 30% |
| Taxes | $ 3,000 | $ 1,500 |
*Tax rate depends on the amount of total income a person has. Assume a combined provincial and federal tax rate of 30% for this example.
- Realized Profit/Loss – A profit or loss is realized when a stock or an asset is sold. The amount of profit or loss is locked when an asset is sold. The total amount of realized profits minus the total amount of realized losses for a year needs to be declared as taxable income during tax season.
- Unrealized Profit/Loss – A profit or loss is unrealized when a stock is not sold yet. It is unrealized since the amount of profit or loss may still change in the future when the stock price move.
Wealthsimple Trade Fees
- 1.5% exchange rate fee for every buy or sell trades of US stocks and ETFs (New: 1.5% fee is eliminated when you opt-in to a $10/month subscription, cancel or re-subscribe to the $10/month plan anytime)
- Free trades for Canadian stocks and ETFs
- No fees for deposits/withdrawals and opening/closing an account
- No monthly fees ($10 a month optional for USD accounts to get free USD stock buy or sell trades)
In comparison, most platforms charge a flat commission fee of around $9 CAD per tradewhen trading Canadian stocks and ETFs, and a commission fee of about $9 USD for every US dollar trades. In addition, most platforms charges a 1-2% to exchange to and from US dollars.
Wealthsimple Trade does not hold US dollars, so the 1.5% exchange rate fee is triggered for every buy or sell. Other platforms have US dollar accounts where the 1-2% exchange rate fee applies less often.
Trading US stocks on Wealthsimple Trade
Trading US stocks may still be cheaper on Wealthsimple for smaller amounts. Most big banks charges a flat fee of around $9 USD for every US trade. Smaller trades of below $500 may still be cheaper at 1.5% fee than the flat fee, while bigger amounts of $5,000 will cost a lot with Wealthsimple Trade.
| Amount of Trade (USD) | 1.5% Fee (USD) |
| $ 50.00 | $ 0.75 |
| $ 100.00 | $ 1.50 |
| $ 200.00 | $ 3.00 |
| $ 500.00 | $ 7.50 |
| $ 1,000.00 | $ 15.00 |
| $ 2,000.00 | $ 30.00 |
| $ 5,000.00 | $ 75.00 |
Free Plan vs Subscription option on Wealthsimple Trade
| Free Plan ($0/month – default) | Premium Subscription ($10/month) |
| Stock and ETF prices displayed are 15 minutes delayed | Real time stock and ETF prices |
| 1.5% fee on US stocks, $0 commission fees on CAD stocks | No commission fees on US stocks and CAD stock trades |
| Instant deposit of up to $1,500 | Instant deposit of up to $5,000 |
The $10 a month premium plan can be cancelled anytime. Instant deposits are refreshed every 3 business days. The new $10/month premium plan will be available in the next month or two. To activate, go to the “Profile” section on the Wealthsimple Trade app or on the Wealthsimple website.
Does Wealthsimple Trade in real time?
The default free plan on Wealthsimple Trade does not display real time prices with 15 minutes delayed stock quotes. However, the actual buy or sell price will depend on the actual real time price of a stock. Wealthsimple offers an optional $10 monthly subscription to display real time prices of stocks and ETFs.
Is Day Trading Legal in Canada?
Day trading stocks, ETFs, and options in Canada is legal when using a trading platform that is an IIROC (Investment Industry Regulatory Organization of Canada) member. Also, taxes on day trading profits have to be declared when filing income taxes.
IIROC (Investment Industry Regulatory Organization of Canada) is a non-profit national self-regulatory organization which oversees all investment dealers in Canada to protect investors. (iiroc.ca)
Assets on Wealthsimple Trade are held by Canadian ShareOwner Investments Inc. Wealthsimple acquired Canadian ShareOwner Investments Inc. on 2015.
From the members list page on iiroc.ca, Canadian ShareOwner Investments Inc. is a member of IIROC. The big banks such as RBC Direct Investing Inc. and BMO InvestorLine Inc. are also regulated by the IIROC.
Can you short stocks on Wealthsimple?
Wealthsimple does not offer shorting individual stocks when using their Wealthsimple Trade platform. Shorting stocks or shorting by buying a put option can be done by using other platforms like any of the big banks or Questrade in Canada.
Shorting can only be done on Wealthsimple by trading inverse ETF that shorts major stock indexes such as the S&P 500. If the S&P 500 go down by 5%, a 3x inverse S&P 500 ETF will go up around 15%. Here is a video tutorial on how to short using Wealthsimple Trade.
Inverse ETFs are limited to major indexes like the S&P 500, the NASDAQ 100, and the Russell 2000 index.
Alternatives to Wealthsimple for Day Trading
Wealthsimple Trade is generally not designed for day trading. I personally use Questrade when day trading. Like the big banks, Questrade offers options trading, margin accounts, and international equities. Questrade Inc. is also regulated by the IIROC and like the big banks, a CIPF member.
The advantage of Questrade to most big banks is premarket and after hours trading. Extended hour trading is available online on Questrade at the same $5-10 fee while the big banks may require telephone trading for extended hours which may cost a minimum of around $40 per trade.
Questrade offers free real time prices for stocks, ETFs, and options.
For more information, visit the Questrade website here.
| Stocks (Buy or sell) | 1 cent per share (min $4.95, max $9.95) |
| Options (Buy or sell) | $9.95 + $1.00/contract |
| ETF Buy | Free |
| ETF Sell | 1 cent per share (min $4.95, max $9.95) |
| Mutual Fund | $9.95 per trade |
| International Stocks | 1% of trade value (min. $195) |