Investing part of your money in Canadian stocks can be an excellent investment strategy. you can purchase stocks in leading Canadian companies, or in up and coming firms you feel will grow rapidly in the next couple years. As with any stock market investment, you will be required to do your homework and research all potential investments before investing your money, and you need to balance your portfolio to avoid overexposure in any one country’s market.
When looking at how to buy Canadian stocks, it’s important that you have a good understanding of the risks of stock trading and have risk capital to trade with.
Unless you have a lot of money and are able to afford a place on the Toronto Stock Exchange, you will need to buy your stocks through a stock broker. A stock broker buys and sells stocks on an exchange on your behalf.
How to Buy Canadian Stocks: Choosing The Right Broker
Choosing the right broker can make a huge difference to your bottom line when you are trading the Canadian stock market. Unfortunately, many brokers are much more interested in extracting as much money from you as they can, rather than giving you a cost effective trading platform.
There is no one-size-fits-all when it come to choosing the right stock broker, so take the time to weigh the pros and cons of each broker prior to committing any capital.
I have spent a lot of time researching brokers to help get you the best deal for your money. The results of my findings can be found on my Canadian Stock Brokers page.
Canadian Stock Screeners
To help you find stocks that you may want to invest in, you may want to use a stock screener. This is a tool that lets you search for stocks based on a criteria you select. For example, you could search for stocks with a market cap of more than $100m with an earnings per share of less than 20. Stock screeners can be an invaluable too for you to use to narrow down the field of potential investments.
Stock screeners are an excellent first step toward identifying potential investments, but you should always remember that further research into each security should be done before any money is invested. Although Canada has historically remained a relatively stable country to invest in, there is always risk associated with investing in securities, and this should be taken into consideration when choosing potential investments.
A stock screener allows you to select your criteria for stocks, it then shows you the results for your search. I have put together a list of the best Canadian stock screeners here.
Have A Trading Strategy In Place
When buying Canadian stocks or rather any stocks for that matter, it is absolutely essential to have a good stock trading strategy in place from the beginning and use good risk management.
It is always useful to test out your trading strategies on a simulated account, prior to trading it with real money. If an investment strategy doesn’t make money, iId much rather find out with pretend money than real money!
As with any stocks, when trading Canadian stocks it’s important to have a good stock broker, a good trading system and good risk management. If you can get these three factors right, you will significantly improve your chances of earning good returns on your hard earned cash, minimize losses and increase your exposure to foreign equities markets.