Questrade
Online Broker Review

Questrade is a relatively new up and coming broker in Canada. It has definitely led the competition by providing great pricing and trading tools in comparison to the big brokerages in Canada (i.e. RBC DS, TD Waterhouse, etc.).

I am not going to bother reviewing the big bank brokerages as I don't think their services are worth the money. They used to charge $30 a trade...so $60 roundtrip...RIDICULOUS! Now they finally have toned it down to more reasonable prices at around $10 a trade..but still Questrade leads in discount brokerage services. 

Most recently, Questrade has revamped their platform completely to Questrade IQ (or IQ Edge which is the desktop platform). I was originally a beta tester for this platform and although there were things for improvement, they have made great strides in the Canadian broker market. 

Asset Classes
Stocks / Options / Bonds / Forex / Gold

Commissions     4 / 5

Account Minimum     Low - $1,000

Customer Service     4 / 5


Commissions

Questrade's commissions are essentially split into two groups. There is the regular pricing and even lower pricing if you sign up for "The Questrade Advantage" (meaning you are an active trader and sign up for a market data package - more on market data below). See the snapshot below for general pricing and individual sections for more information.

STOCKS     $4.95 - $9.95

OPTIONS      $9.95 + $1.00/contract

FOREX      No commission

BONDS     No commission

ETFs     $4.95 - $9.95 only on selling

MUTUAL FUNDS     $9.95

GOLD/SILVER     $19.95


Stocks

If you are an active trader and you sign up for the Questrade Advantage, if you are trading 500 share lots or higher it'll be more beneficial for you to go with the flat rate:

Regular Pricing

1¢ per share
$4.95 MIN - $9.95 MAX


Questrade Advantage

1¢ per share
1¢ MIN - $6.95 MAX
or
$4.95 Flat per trade


Options

All option exercises and assignments cost $24.95 flat.

Multi leg option strategies - can buy/sell series of orders with only one commission.
They offer multiple strategies including calendar/straddle/strangle/butterly/condor, etc.

Account Minimums:
$5,000   to trade option spreads
$25,000 to write (sell) uncovered options

Regular Pricing

$9.95 + $1.00/contract

Questrade Advantage

$4.95 + 75¢ per contract


Forex

No Commissions on forex trades.

Caution!
Similar to all forex brokers with no commissions - they still will be making money. You are not charged a specific commission per trade however, they will charge you based on a spread between the buy/sell quote. This reduces your profit.

They do offer 30+ currency pairs with spreads from 1-2 pips but that will depend on the currency pair. 


Bonds

Questrade has eliminated the charge to buy and sell bonds/GICs.

Note that the minimum purchase is $5,000 or higher depending on the security.

Caution!
Just because there is no commission, doesn't mean its free. There is no free lunch. Fixed income products are sold over the counter (i.e. you can't execute these on an exchange but have to call the broker to initiate the trade). Therefore I am sure there is an indirect charge in the spread similar to Forex brokers that state "no commission."


ETFs

  • Buy any Canadian or US ETF commission free (no restrictions/no minimum holding period)
  • Only pay standard commission upon selling

Gold

You can buy gold or silver for $19.95/trade however as you are buying the physical commodity there are storage costs associated with this.

Storage Costs:
Gold: $0.10/oz per month
Silver: $0.01/oz per month

The bullion is segregated and stored at the Royal Canadian Mint. This means the physical gold you own is actually seprated out and stored under your name unlike ETFs for which you buy a 'gold certificate' saying you own X amount of gold. For ETFs the amount of certificates (i.e. claim on ounces) is multiple times higher than the actual gold the ETF physically stores. 


Market Data Subscriptions

Their platform is free but only offers "snap quotes" when trading securities. This means any time you want to see the most recent price of the security you need to keep clicking the "snap quote" button on the platform to get the bid and ask info.

If you are into more active trading you will need to subscribe to market data...Clicking snap quote for real-time price? Ain't no body got time for that!

You can view the details of pricing here.

If you are new to active trading, you might feel a little overwhelmed seeing all the ton of options there are when it comes to the data feeds that are provided and what they mean.  Here is a simplified breakdown:

Level 1 real-time quotes: $19.95/month

For the Questrade Advantage pricing (described in commissions above):

Canadian Package - $89.95/month 

  • I don't suggest this package. The only relative benefit is that it offers Level 1 streaming data of Junior Canadian exchanges  (i.e. TSX Venture)

U.S. Package - $89.95/month

  • Offers Level 1 and Level 2 data of major US exchanges (you really just miss out on some TSX real time level 1 data which I don't think is a big deal unless all you trade is TSX)

NOTE: These two data packages can be offered for free if you generate at least $400 in commissions per month. At $4.95/trade you are looking at about 80 trades per month. 


Advantages

General

  • Offers a variety of asset classes 

  • Only need $1,000 minimum funding

  • Offers forex trading which is atypical compared to the big name Canadian brokers

  • Can buy physical gold/silver bullion

  • Low cost broker/free trading platform with above average tools and capabilities

  • Good customer service - phone, e-mail and live chat available

  • New features that visually break down your holdings and investment returns over your entire history with Questrade in a very appealing format

  • Easy to use, intuitive platform

Unique Services

Questrade offers two unique services I noted that are very useful. 

Mutual Fund Trailer fee Rebate

When holding mutual funds, you indirectly pay what is called a "trailer fee." Questrade provides a service that reimburses trailer fees, rebating them back into your account which decreases the fees you have to pay.

You don't actually see these charges on a statement as they are embedded in the management expense ration (MER) which is usually around 2%.

They have a calculator on their website where you can set up certain parameters, selecting the specific mutual fund you want to invest and it will calculate how much you will save with this feature. 

NOTE: There's a catch!! In order to receive the trailer fee rebates you need about $36,000 in mutual funds. 

Holding $USD in RSP Account

You can hold both $USD and $CAD cash in any registered account such as TFSAs (tax free trading account). 

So what? How does it work? 

If in Canada and you want to buy US stocks, you will need $USD. So you can either fund the account in $USD or convert Canadian dollars into USD.

Once converted you can use that money to buy/sell US securities. Normally in registered accounts you must hold CAD therefore when you buy a US stock, the broker converts your CAD into USD to make the purchase and upon selling converts it back from USD to CAD.

So each time you make a trade there are conversion costs which can REALLY add up. This is a huge advantage and Questrade is the only Canadian broker to accept USD inside registered accounts. 



Disadvantages

  • Although platform is relatively better compared to retail accounts at major banks in Canada, not the best for very active traders

  • When using the charting on the platform it is not the most convenient to manipulate and at times was quite annoying

  • Do not seem to get the best execution for options; I found Interactive Brokers to be superior in this
    (from personal experience I just find I get better fills with IB but they are also known for having the best execution in the industry)

  • In order to get reduced commissions if you trade actively you will need to pay $89.95/month in market data fees;
    OR
    You can get the market data for free for this plan, BUT you must generate at least $400 in monthly commissions

  • In order to have real-time Level 1 data quotes, you have to pay $19.95/month or generate at least $50.00 in commissions to get this service for free; many other brokerages (tailored to more savvy investor/traders) offer cheaper data packages

Final Thoughts on Questrade

From my research and experience, Questrade is the best Canadian broker. It has improved tremendously over the years and a lot of the issues I faced with them have been fixed. Therefore currently there really aren't any major bad things I can say about them other than I think their focus is on retail clients that are not professional/serious traders; albeit, they have been expanding their services to start attracting these traders.

They have done a great job streamlining their services and they offer very low fees in comparison to the major banks in Canada. 

I think this is a great broker for those who want to 1)begin trading; 2) do not trade very often and either are swing traders or position traders; 3) are not at a professional or intensely active level.

If you are a Canadian citizen who wants to open up a TFSA to trade, Questrade is the broker to do it with as the other banks have higher fees without the incremental value in my opinion.

If you are a scalper or serious day trader that needs a reliable platform and fast customer service I think there are better options out there for you. You probably want a broker that tailors to more professional traders such as Interactive Brokers or Tradestation. 



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