How to buy US stocks from Canada

By   |   Verified by Nikita Sheth   |   Updated 5th May 2021

How to buy US stocks
  • Diversify your portfolio and increase your returns by investing in the US market.
  • Find brokers that permit trading in Canadian and US stocks, ETFs, and even options.
  • Take advantage of no-fee or low-fee commissions.

If you want to get in on the action with US markets, you need a broker offering international opportunities for your trading strategy. Buying Tesla, GameStop or Amazon requires Canadians to sign up with a broker that lets them buy and sell stocks as a Canadian citizen living in Canada.

With the right broker, you can trade on the Nasdaq and NYSE. But when there are so many platforms to choose from, what is the best trading platform for you?

We've done the hard work for you, researching individual trading platforms to curate our choice of the best trading platforms in Canada for new investors to experienced traders looking for a change.

Why invest in US stocks?

The Toronto Stock Exchange (TSX) offers plenty of trading opportunities for Canadians but nowhere near the same level as US markets.

Over the last decade, the S&P 500 index returned over 14%, while the TSX only managed 6.9% growth in the same time period.

The action in the US markets offers more volatility, and as all traders know, volatility equals opportunity.

Best brokers for Canadians to trade US markets

Best for inexperienced traders

Wealthsimple TRADE

As Canada's only zero-commission broker, Wealthsimple Trade offers you commission-free trading on US stocks, options, ETFs, and Mutual Funds.

There are no account fees when signing up with Wealthsimple, and you get a mobile interface for your trading activities. There's no account minimum, and you get fast order execution, with a watchlist function to monitor your favorite US stocks.

Wealthsimple offers market and limit orders on US stocks, with unlimited commission-free trades. Customers can also open TFSA, RRSP, or non-registered (taxable) accounts to trade stocks with no commissions or fees.

Pros

  • Commission-free trading on US and Canadian stocks and ETFs.
  • No minimum account balance.
  • Watchlist for your preferred stocks.
  • User-friendly mobile trading apps for iOS and Android devices.
  • Invest in TFSA and non-registered accounts.

Cons

  • Delayed market price quotes by up to 15 minutes.
  • No margin accounts available.
  • RESP accounts not available.

Best discount trading platform

Qtrade

Qtrade Investor offers you discount broker services for accessing Canadian and US-based stock markets.

You can trade options, ETFs, and stocks, with Qtrade providing a functional and user-friendly trading platform that meets the beginner trader's needs. Qtrade offers new traders simple order types and placements, along with easy navigation of trading platform layouts.

Qtrade offers dozens of commission-free mutual funds and ETFs, but they aren't as competitive as other brokers regarding options and stocks.

Pros

  • Simplified trading platform with easy to understand charts.
  • Real time quotes, including watchlists and price alerts.
  • Access to 100 commission-free ETFs and mutual funds.
  • Discounted commissions for active day traders.
  • Access to high-quality research by Scotia analysts.
  • Demo account available for paper trading.

Cons

  • Not available to US residents or Canadians living outside of Canada.
  • No option for funding through credit cards or e-wallets.

Best for international markets (inc. US)

Scotia iTRADE

Scotia iTRADE is a division of Scotia Bank and one of the Big 5 banks in Canada. iTRADE offers you access to international markets, including US stocks, ETFs, options, and mutual funds.

There is a broad range of international equities available, and you can make deposits in CAD. Fees are affordable and some of the best in the industry. Since you’re dealing with a large bank as your broker, you get insurance on your account and excellent customer service.

Pros

  • Access to US and Canadian listed and OTC stocks.
  • Discounted commission structures for active day traders.
  • High-quality, award-winning trading platform.
  • Access to market research by Scotia Bank’s top analysts.
  • Demo account for practicing your strategy.

Cons

  • Annual fees for registered and unregistered accounts.
  • The Premium FlightDesk trading platform costs an additional monthly fee.

Best for experienced traders

Interactive Brokers

Interactive Brokers is one of the leading international brokers catering to Canadians.

Although they have two versions of their platform — IKBR Lite and Pro — only Pro is available in Canada. Like Scotia, if you trade more than $10 in commissions, there are no monthly fees on your account. With IKBR, you get access to stocks, bonds, options, ETFs, currencies, and futures. Trade on all US stock markets, including Nasdaq and NYSE.

One of the most appealing features of Interactive Brokers is the ability to make passive income by loaning your stock out, a process known as securities lending. This is not possible with any of the other brokers mentioned in this article.

Pros

  • No commission fees for listed stocks and ETFs.
  • Can trade globally, including Hong Kong, Australia, Japan, and more.
  • Offers margin trading.
  • No minimum account balance.
  • Offers stock loans for additional income stream.

Cons

  • Real-time pricing available only with paid subscription.
  • IBKR Lite — more suitable for inexperienced traders — is unavailable to Canadians.

There are other stock trading platforms available in Canada. If you would like more options, please consider our stock trading comparison.

What to look for when choosing a broker

Before you sign up with any discount broker, make sure you investigate the following in their terms and conditions.

  • Broker fees: Every discount broker has a different fee schedule. Some offer commission-free trades, while others charge you as many fees as they can. If you're thinking about using a zero-commission broker, make sure you do your homework on the fee structure. Many zero-commission brokers use a higher fee structure to compensate for offering zero commissions.
  • Exchange rates: Exchange rates can differ from broker to broker. Some brokers use higher exchange rates to compensate for providing lower trading fees.
  • Monthly fees: Some brokers require a monthly fee for hosting your account on the platform. Some also charge inactivity fees if you don't use your account for a certain period or you don't meet a monthly trading volume requirement.
  • Market data: Does your broker offer real-time market data and quotes? Do they charge for the service?
  • International markets access: Which countries and what exchanges can you trade on with your broker?
  • User-friendly trading platform: Is it easy to navigate the trading platform and execute orders?
  • Order types and trading access: Does the broker offer online trading platforms only? Do they offer you the ability to phone in your order? What kind of order types are available through your broker?
  • Educational resources: Trading takes a lifetime to learn. Does your discount broker offer you educational tools to improve your trading?
  • Customer support: Do you get access to 24/7 customer support? If things go wrong with your account or trading platform, you need to have service consultants ready to assist you.

Tax implications of trading US stocks in Canada

If you're trading in a non-registered investment account, the Internal Revenue Service withholds 15% of your dividends paid by US companies. It's important to note US dividends don't qualify for a dividend tax credit. These dividends have a classification as foreign income. Therefore, you get taxed the same way as interest income. Dividends paid through US stocks in a registered retirement account (RRIF or RRSP) have tax-exempt status with the IRS. It's important to note that the IRS won't recognize RESP or TFSA, and withholding taxes will apply.

Pros and cons

If you are new to trading the US markets, there are obvious advantages and disadvantages compared to trading the TSX. These are some of the most important to consider.

Pros

  • Access the US market for more trading opportunities.
  • More brokers are offering cheaper fees and commissions, and some offer zero-commission structures.
  • You get to diversify your portfolio away from Canadian stocks into US stocks, mitigating your portfolio risk.

Cons

  • Most brokers have a fee structure. If you want to avoid trading fees, you'll need to go with Wealthsimple Trade for zero-commissions.
  • You'll need to pay currency conversion fees when depositing into your account using CAD.
  • Many Canadian discount brokers that offer US market access have a fee schedule, and you'll need to check for other charges like inactivity fees on your account.

FAQs

Can you buy US stocks in CAD?

Yes, most discount brokers in Canada accept CAD deposits. However, you'll need to pay a currency conversion fee when funding your account or withdrawing. US stock markets only operate in USD.

Should I Buy US stocks in a TFSA?

Your Tax-Free Savings Account (TFSA) is a great way to keep all the profits you make trading. As long as you're trading on exchanges like Nasdaq, TSX, and NYSE, you won't have any issues trading in your TFSA.

Are capital gains on US stocks taxed in a TFSA or RRSP?

No, you don't have to pay any capital gains tax on investment income, capital gains, or dividends when withdrawing your TFSA.