Day Trading with Questrade: Is It Really a Good Idea?


With the unprecedented changes in the traditional work environment brought on by the COVID-19 pandemic, many Canadians are looking into alternative ways to generate income.

With the explosion of fintech platforms, such as Questrade, which makes access to the financial markets very easy for the average Canadian, one idea is to become an at-home day trader.

But is it a good idea to day trade with Questrade?

It is not a great idea to day trade with Questrade. While Questrade does offer full functionality for day trading stocks, ETFs, and options and does have some advanced features that can provide users helpful insights, its relatively high transaction fees undermine profits for those making frequent trades.

So if you are day trading with serious money to which the trade commissions of Questrade are just a drop in the bucket, then Questrade does have some features that make it an attractive platform for day traders. 

Can You Day Trade with Questrade?

Yes, you can day trade with Questrade.

It has all of the features necessary to place standard market and limit orders, so even with a standard account, people who are willing to commit the time can quickly convert transactions from their computer and mobile devices.

In addition, day traders frequently make use of a special kind of order, known as a stop/loss. This allows your account to automatically sell when a stock reaches a certain high point or automatically buy when a stock reaches a certain low point.

Quick Note #1: Canadian exchanges do not allow stop orders, so although Questrade has the capability, you may be only able to use this common day trading feature for U.S. securities.

For more serious day traders, Questrade offers an upgrade from its standard account with its Active Trader feature. Among the benefits of Active Trader include more favorable commission fees for high-volume traders, as well as advanced live data for both Canadian and U.S. exchanges so that day traders can execute with up-to-the second information.

Is Questrade Good for Day Trading?

Overall, Questrade can best be classified as “okay” for day trading. While it has some features that make it attractive, its commission fees should make you take caution.

Some of the Features that Make Questrade Good for Day Trading Include:

  • Intuitive interfaces for both desktop and mobile compatibility, allowing account holders to day trade anywhere at any time.
  • The ability to execute market, limit, and stop/loss orders (for U.S. listed securities).
  • Upgrade option for Active Trader software.

Clearly, from a technology standpoint, Questrade is a perfectly fine platform for day trading. However, the transaction fees need to be carefully weighed before making a decision.

With a standard account, the commission fees for Questrade are as follows:

  • Stocks – $.01 per share, with a minimum of $4.95 and a maximum of $9.95.
  • Options – $9.95 + $1 per contract.
  • ETFs – no fee to buy, but the same fee as stocks to sell.
  • Mutual funds – $9.95 per trade.
  • International stocks – 1% of trade value, with a minimum of $195, as well a stamp duty or exchange fees.

As day trading is all about making frequent trades at small profit margins, you can see how these commission fees would quickly eat away at any profits you may make. If you make 10 trades a day (a modest number by day trading standards), you can expect to spend anywhere between $50 to $100 just in fees.

An upgrade to Active Trader can help lower these commission fees, but then you’ll also have to consider the additional subscription fee for upgrading to this plan.

As a result, if you are an inexperienced day trader who does not have the nest egg to trade in quantities of 10,000 shares or greater, it’s probably best to look for a free trading platform, even if it has slightly less desirable features than Questrade. 

Should I Day Trade with Questrade?

It’s always important to understand the general pros and cons of day trading before attempting to do it with Questrade.

On the positive side, day trading can be a fun and fast-paced way to make money from home. If you are a numbers person with a financial background, it can actually be a legitimate way to do something you love to generate an income.

On the downside, it can be really, really (really really really)tough for inexperienced traders to day trade correctly and turn a profit.

You must capitalize on your gains when they present themselves and know went to cut your losses before it’s too late. It is a minute-by-minute landscape. Many, many millions have been lost by day traders who’ve waited too long for a sinking position to turn around.

In addition, it’s important to realize that gains from day trades are classified as business income and are taxed at a 100% inclusion rate. Normal capital gains are only taxed at a 50% inclusion rate, so there are some definite tax drawbacks to day trading that need to be considered as well.

All in all, given the tax implications and commission fees, day trading with Questrade can be quite expensive. Only attempt it if you have complete confidence in your abilities and have a sufficient enough nest egg where small percentage increases equate to real dollars.

Can You Day Trade in a TFSA with Questrade?

You can attempt to day trade within your Questrade TFSA, but there is a good chance you will end up getting penalized. 

In other words, you’re not allowed to day-trade in your TFSA.

I actually wrote an entire article on this topic titled, 6 Things You Need to Know About Day-Trading in a TFSA. But the gist of it is, it’s not allowed.

A TFSA is a way to earn tax-free investment gains. While you can make some trades within your Questrade TFSA, you will end up getting taxed at the 100% inclusion rate (and potentially paying more in fines) if it is detected that:

  • Your holdings within your TFSA are showing a pattern of short duration.
  • You are trading at a high volume in your TFSA.
  • You are spending an inordinate amount of time trading within your TFSA.
  • You are frequently turning over penny stocks in your TFSA.

Therefore, use your Questrade TFSA as it was intended and do not attempt to use it as a day trading vehicle. 

To learn more about TFSA and their advantages and disadvantages, check out my article here.

Day Trading with Questrade: The Bottom Line

You can absolutely day trade with Questrade, and it has perfectly viable technology in place for you to use as a day trading platform. However, given the high commissions per trade and the inherent risks of day trading, it is important that you carefully weigh your options before using your Questrade account as a day trading platform. 

Me personally, I love Questrade (6 Reasons Why I Recommend Questrade), but would I use it for day trading? Certainly not.

Why not? I don’t believe I have the skill set, expertise or funds to do it effectively in order to constantly turn a profit.

But that’s just me.

As always, thanks for reading! I really hope you found value in this article. If so, please like, subscribe and….just joking. I have nothing to ask of you.

Have a great life.

Geek, out.

Noel

Noel is the founder and main contributor for his blog - Noel's passion for personal finance has helped him amass over 600k readers to his Financial Geek blog.

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