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Updated 2mo ago.
Updated 2mo ago.
Day trading involves buying and selling stocks or other securities within the same trading day, aiming to profit from small price fluctuations. All positions are opened and closed on the same day, with nothing held overnight. It is a high-risk activity that requires time, knowledge, and a high tolerance for losses.
A Canadian day trader might buy 500 shares of Royal Bank (RY.TO) at $135.20 in the morning, then sell them at $136.10 in the afternoon, pocketing a gross profit of $450. But factoring in commissions, taxes on short-term gains, and losses on bad days, reality is far less glamorous.
For beginner investors, day trading is generally not recommended. The vast majority of day traders (70–90% according to studies) lose money over the long term. In Canada, day trading profits are generally taxed as 100% business income (not as capital gains). CRA may even reclassify a TFSA used for day trading. Passive investing through ETFs like XEQT.TO offers better risk-adjusted returns.