When it comes to the stock market, "day trading" is arguably the most popular strategy among beginners or those who don't want to utilize the "buy-and-hold" methodology that produces strong returns in the long term.
Those who day trade stocks, an extremely speculative strategy, look to enter and exit positions using highly volatile stocks within the same day. Day traders never hold positions, at least the ones they are day trading, that is, overnight.
Around 90% of investors that attempt to day trade will fail. There is a 1 in 10 chance of either breaking even or being profitable over the long term.
It is often said that the only people who truly benefit from investors' day trading are the trading platforms, as they rake in trading fees daily.
But, some people can scrape out solid profits day trading over the long term. Although it is difficult, it is possible.
In this article, we will go over some of the best day trading stocks in Canada.
The Best Day Trading Stocks in Canada
|Company||Price||1 Yr Return|
|McEwan Mining (TSE:MUX)||10.02||38%|
|NuVista Energy (TSE:NVA)||11.11||-11%|
|Aurora Cannabis (TSE:ACB)||0.68||-59%|
|Air Canada (TSE:AC)||18.27||-6%|
|Lightspeed Commerce (TSE:LSPD)||22.54||8%|
|BRP Inc (TSE:DOO)||82.41||-21%|
|Illumin Holdings (TSE:ILLM)||1.46||-43%|
|Whitecap Resources (TSE:WCP)||8.99||-10%|
|Our Top Pick For 2023 (Click Here)||??||??|
Once among strong Canadian dividend stocks, Cineplex has been hammered over the last 5 years due to the gradual decline in cinema popularity and the COVID-19 pandemic.
As a result of all the headwinds, this stock has become a popular option for day trading here in Canada.
In fact, with a beta of 2.69, you will have no problems getting large fluctuations in price daily.
The company's 52-week highs are nearly double its lows, which makes it a perfect candidate for day trading.
McEwan Mining (TSE:MUX)
Out of all the stocks on this list, McEwan mining is by far the most volatile. In fact, its beta of 3.6 suggests that when the TSX moves 1% in either direction, this one will move more than 3.6 times that.
This is a small-cap mining and exploration company with exposure to Argentina, Mexico, and the United States.
The company's high point in terms of share price over the last year has been a gigantic 20x higher than its 52-week low.
With a max drawdown of over 87%, this stock is about as volatile as it gets. Day traders must figure out if trading stocks with this type of volatility fits into their overall strategy.
Bombardier Inc (TSE:BBD.B)
Bombardier has a long, storied history here in Canada, but not in a good way. The company has been bailed out numerous times and has received billions of dollars from federal and provincial governments.
The company primarily makes business aircraft, operating in Europe, North America, and the Asia-Pacific.
With a beta of 3, this is yet another highly volatile stock that can undergo significant price swings daily; perfect if you're looking for frequent exits and entries.
This stock's 52-week high is a whopping 3x higher than its 52-week low. Along with this, a maximum drawdown of 94% shows this stock can see significant price movement in a very short amount of time.
NuVista Energy (TSE:NVA)
The COVID-19 pandemic and the conflict between Ukraine and Russia have caused significant volatility in the oil and gas sector. From collapsing energy prices and, thus, oil stock prices to a surge in oil prices in February of 2022 due to the war, affected companies have certainly had their share of turbulence.
NuVista Energy is one of the most volatile. It is a junior oil and gas producer you can add to your watch list if you're looking to day trade in the Canadian oil stocks sector. It has a beta of 3, suggesting it is 3X more volatile than the overall markets.
The company has been a near 30-bagger since the bottom of the COVID-19 pandemic. Its market cap accelerated from $125M to, at some points, over $3B. The current spread on its 52-week low and high is around 2.5x, and this one will provide plenty of opportunities for those looking to day trade it.
Aurora Cannabis (TSE:ACB)
The Cannabis euphoria in 2017/2018 made some millionaires out of relatively small investments in Canadian marijuana stocks. However, those who got stubborn and hung on lost nearly everything, as these companies have witnessed catastrophic growth and stock price setbacks.
In fact, $40,000 in Aurora Cannabis in June of 2016 would have made you a millionaire by January 2018. However, if you had held this investment until today, you'd have less than $10,000 left.
However, as day traders, we really don't care much about that. We just want large swings in price. And with Aurora, you're going to get that. The company's 52-week low and high spread is a whopping 6.5X.
Air Canada (TSE:AC)
Air Canada stock was arguably one of the most popular Canadian airline stocks during the COVID-19 pandemic in North America. The stock was heavily traded, highly volatile, and could produce double-digit swings in price in a matter of hours. With a beta of 2.5, Air Canada is still volatile even as we exit the pandemic and the world gets back to normal.
This one has the tightest 52-week high/low spread, but it also has large daily trading volume for optimal liquidity. It is also a stock that investors can utilize options activity on if they wish.
There are often multiple periods of double-digit swings in price, even over a 1-month timeframe for Air Canada. Patient traders can add this to a watchlist and time their entry points during periods of high activity.
Lightspeed Commerce (TSE:LSPD)
Over roughly the last year, Lightspeed Commerce has been a day trader paradise. The company can swing 20-30% in either direction within days. Many traders of Canadian tech stocks have taken advantage of this on the long and short side over the last while. The company has a beta of around 2.9, primarily because its price has somewhat settled lately.
Make no mistake; in a bull market or further market volatility on the retail/restaurant side of things, this one is much more volatile than its beta says.
It can be a strong candidate for day traders, but also one that swing traders could look into as well, as 50% moves in price over a few weeks to a month is not unheard of with Lightspeed.
BRP Inc (TSE:DOO)
This is one of the larger companies on this list. The recreational vehicle maker is seeing some large-scale volatility over the last year, primarily because of its Russian operations. Many investors believe that recreational vehicle spending is set to collapse in the event of a recession.
The reason the stock is so volatile is quarterly results have not given any indication that the company is slowing down. So, it often goes through prolonged downtrends followed by a spike post-earnings.
If you're looking for some of the best stocks with high volatility in and around earnings time, BRP Inc is definitely going to be one you'll want to have a peek at.
Don't mistake this company (Bombardier Recreational Vehicles) for the other Bombardier on this list. BRP Inc was spun off Bombardier in the early 2000s and is its own entity.
Illumin Holdings (TSE:ILLM)
Illumin Holdings saw a massive, somewhat unjustified rise in price during the early days of market euphoria in 2021. The company reached highs above $30 and has, at some points, collapsed to sub $2 prices.
But this one is a haven for day traders, and 5% daily moves in Illumin Holding's price have become the norm as of late.
The company is an advertising platform and one that is expected to experience a decline in activity due to the potential recession. And as a result, this one has significant price swings based on earnings activity and even simple news releases.
It is a small-cap stock with a relatively low volume, which also amplifies the current volatility. Active traders have been trading Illumin for the better part of 3 years now, and I don't expect it to slow anytime soon.
AutoCanada Inc (TSE:ACQ)
AutoCanada offers new and used vehicles, spare parts, maintenance services, and customer financing. AutoCanada retails brands such as Chrysler, Dodge, Jeep, Ram, Cadillac, Chevrolet, Buick, GMC, Audi, Volkswagen, BMW, Mini, Infiniti, Nissan, Hyundai, Kia, Fiat, Mitsubishi, and Subaru. The majority of revenue is generated in the new-vehicles sales segment.
The reason the stock is so volatile, with a beta of near 3, is because of the overall volatility in the automotive market right now. Rising interest rates are likely to kill a lot of new/used vehicle activity, and many investors believe AutoCanada could take a hit in revenue and earnings.
So, it tends to be highly volatile, particularly around quarterly filings.
Whitecap Resources (TSE:WCP)
As mentioned with NuVista Energy above, oil and gas stocks have been highly volatile over the last few years, especially when we look at junior producers like Whitecap. The company has a beta of 3. When the TSX moves 1% in either direction, this one will move triple that at 3%.
Whitecap is even more volatile in that it often tracks the price of oil. When crude goes down, WCP will likely also, and vice-versa. So, trading these junior oil and gas stocks requires one to keep a keen eye on the price of commodities, primarily crude oil and natural gas.
Whitecap is a company that often posts double-digit losses/gains over a month, so it is a stock that day traders love.
What Makes a Stock Suitable for Day Trading?
Because we want to profit off daily fluctuations in equity prices, for the most part, we need highly volatile equities to take advantage of swings in price, along with high-volume stocks. If the asset we are day trading doesn't move much in a day, we will either need to invest larger sums of money or be willing to accept lower profits.
For example, day trading a regulated utility stock like Fortis, or a bond, would produce minimal swings in price. Whereas trading the most volatile stocks, like a high-beta tech stock or a penny stock, where you could see 5%+ swings in a single day, could lead to more significant profits.
A stock doesn't necessarily need to be small to be a good candidate for day-trading, either. In fact, Tesla Inc, which trades under the ticker TSLA on the NASDAQ, has been a perfect candidate for day trading for years.
Keep in mind, you could also look to trade an exchange-traded fund. You'd simply look for ETFs that have volatile underlying holdings or are possibly leveraged to the index.
Understanding the Risks of Day Trading
Before we get into the top day trading stocks here in Canada, we first have to highlight the risks of day trading and some steps you can take to mitigate your potential losses.
As mentioned, most people will be unsuccessful at day trading. It is critical that you set aside only a small portion of your overall portfolio for this type of speculative investing, and you have the right equipment to succeed. Stick to strict guidelines as to what you're willing to lose.
If you're trading on margin or trading uncovered options contracts, you can lose more than what you've set aside. It is crucial to always understand the impacts of leverage on your portfolio.
Another risk to consider is one of the tax-man if you plan to day trade inside of your Tax-Free Savings Account (TFSA). Just know that this is not allowed, and if the CRA catches on, you may be forced to pay taxes on your earnings. As such, day traded items are unlikely to be the best stocks for your TFSA.
Taxes When it Comes to Day Trading
Many Canadians make the mistake of thinking that their taxes on day trading profits will come in the form of capital gains tax. However, if you're day trading, the Canada Revenue Agency will likely deem your profits as business income.
Before you start day trading here in Canada, contact an accountant and figure out the best setup for you. If your day trading qualifies as a business, you may also be eligible to write off business expenses. This can include interest paid on borrowed money in margin accounts.
What are the Best Brokerages for Day Trading in Canada?
If you're looking to start day trading, you need to find a way to reduce fees. Commissions paid on trading can eat into your overall profits. For this reason, we'd highly suggest utilizing a commission-free brokerage like Wealthsimple Trade. The only difficulty with Wealthsimple is the platform is a simple, no-frills online brokerage and has a fairly simple mobile app.
With day trading, you may need an online broker that gives you access to charting platforms to execute technical analysis.
Suppose you're looking for something with more advanced tools and relatively cheap commissions (although not free). In that case, Interactive Brokers is a great place to start. The brokerage has many more trading tools and is one of the best day trading platforms available.
That isn't to say you can't trade stocks with RBC Direct Investing, CIBC Investor's Edge, Qtrade, Scotia iTrade, TD Direct Investing, Questrade, or any of the other major brokerages here in Canada. It's important to weigh all options to find the best online broker for your specific trading needs.
What are the Most Popular Day Trading Strategies?
- Trading the news
- Breakout trading
- Momentum trading
- Reverse momentum trading
- Trading pairs
- Pivot point trading
This is far from an extensive guidance on day trading strategies. If you want to learn more, your best bet is to research each strategy. This list is meant to help you save some time in identifying various methods.
How Much do Day Traders Make per day?
If you are going to be successful at day trading, the size of your account determines how much you can make.
Let's assume a successful day trader can average 4-5% monthly returns on their money. In that case, a $100,000 account balance would net the trader around $60,000 a year. A $200,000 account balance? Around $120,000 a year.
Remember that these numbers are just estimates and before commissions, taxes, and other fees.
Despite what many gurus will try and tell you, the vast majority of day traders will make nowhere near 4-5% returns on their money in a month.
What Percentage of Day Traders are Successful?
Only around 10% of day traders avoid losing money over the long term. This produces around a 90% failure rate. It is essential to understand that financial gurus and day trading "experts" will often tell you the majority of their students earn money.
This is factually inaccurate, often disproven in a "results not typical" disclaimer. If you're going to day trade, you must do so with a level head and the acceptance that you will likely fail.
Is Trading Penny Stocks Worth it?
Penny stocks often have low floats and smaller volumes. They can be manipulated much easier than a stock trading on the Toronto Stock Exchange. As such, they are perfect candidates for trading.
However, Canadian penny stocks do not have the same regulatory requirements as companies listed on larger exchanges such as the TSX. Due to this, penny stocks are prone to excessive scams and manipulation.
Is Day Trading Profitable Right Now?
Day trading can be profitable for those who take it seriously. Success will require 40+ hours a week of research, studying, and building knowledge. Be cautious of anyone who tells you they make a living trading a few hours per week. They are more than likely trying to sell you something.
Day trading is ultimately easier in "easy" markets like we witnessed in 2020 and 2021. During a bear market, a recession, or even normalized market conditions, profitability is still possible but certainly harder to achieve.
What are the Safest Stocks to Day Trade?
It is important to note that there is no "safe" option for day trading. Day trading poses significant risks to capital. It is vital that day trading is limited to only a tiny portion of your investment portfolio. However, there are "safer" options, and that would be large-cap companies with lower overall volatility.
If we compare a large-cap stock to a meme stock, penny stock, or small-cap stock with significant volatility, you are likely to see fewer swings in price. Although your upside is likely capped by trading larger stocks, you also have some degree of downside protection.