• Jerremy Alexander Newsome

Why Invest in the Canadian Stock Market?

Why Invest in the Canadian Stock Market?

Hello Real Life Traders,

My name is Roberto, I am a Real Life Trader and I have a passion for the stock market. Today I am here to discuss the Canadian stock market and its magnificent opportunities. My intention is to present other Real Life Traders the opportunities that exist in the Canadian stock market. In addition, I want to address myself to Canadian traders who are getting hit hard by exchange rate standing at 1.30. Your hard earned dollar is being pounded by the exchange rate and you are left with less purchasing power to pursue your trading quest.

A solid illustration of diminished purchasing power can be found in the conversion process of exchanging CAD to USD. Lets say you were to convert 5000$ Canadian. Subsequently once the exchange has occurred, you will ooze about 1200$ and be left with 3800$ USD. The point I am trying to illustrate is that you are loosing about 30% of your purchasing power simply on the exchange!

Furthermore, there isn't that much opportunity left over for the Canadian dollar to keep decreasing in my honest opinion. This represents great opportunity for American traders and allows all traders to discover, if they haven't yet, the Canadian Stock Exchange ☺

For the first three of my four years trading, I used to think there wasn't much opportunity in the Canadian markets. I simply assumed it was very low in volatility and that Canadian Stocks were not optionable because I couldn't find them on Yahoo Finance.

My motive is to demystify, clarify and demonstrate that the Canadian stock market offers immense opportunities for Canadian traders as well as international traders. Certainly there are fewer stocks that have one million shares traded daily than US stocks. However this should not be seen as a drawback, rather it can be seen as an opportunity to remain disciplined on fewer stocks. Moreover Canadian stocks can produce satisfying volatility, trade more than one million shares daily and can also be optionable!

Here are 5 Fun Facts about the Canadian Stock Market

The main exchange is the Toronto Stock ExchangeThe Montreal Stock Exchange is for Options and FuturesThe Canadian Stock Market is heavily concentrated in Energy and Financial sectors8th largest stock market in the worldOver 50 stocks trade above 1 million shares daily

So here's the question: Why does it represent a great opportunity for American traders specifically? Well truthfully if you like to swing trade, the American Stock market provides more opportunities than one can capture in a lifetime and you don't really need to venture off in the Canadian market for more swing trading opportunities. However if you love the covered call strategy and would like to be in a trade for longer than one year by doing covered calls and collecting good dividends than you have an amazing opportunity with a strong US dollar.

As previously mentioned, the exchange rate pulverizes Canadian Traders exchanging Canadian money. However to be on the other side of the exchange you can gain 30% more on your dollar and increase your purchasing power.

So here is a strategy one can profit from. Canada is reputed to have the soundest banking system in the world for the eighth consecutive year by the World Economic Forum. (http://www.tfsa.ca/financial-services/banking/)

The main Canadian banks are:

1) Royal Bank of Canada (RY.TO) Dividend& Yield 3.24 (4.03%)

2) Toronto Dominion (TD.TO) Dividend& Yield 2.20 (3.85%) 3) Bank of Nova Scotia (BNS.TO) Dividend& Yield 2.88 (4.36%

4) Bank of Montreal (BMO.TO) Dividend& Yield 3.44 (4.06%)

5) Canadian Imperial Bank of Commerce (CM.TO) Dividend & Yield 4.84 (4.88%)

6) National Bank of Canada (NA.TO) Dividend& Yield 2.20 (4.87%)

These are solid dividend payouts from companies who have been around multiple economic cycles and have done well in any economic cycle. Bank of Montreal (BMO) has a dominant dividend payout history with continual dividend payments since 1829! In other words, Canadian banks deliver a great deal of their earnings to investors in payouts demonstrated by their decent dividend yield ratio.

So why do Canadian banks and other Canadian stocks represent solid investment opportunities for American investors? Well, with the exchange rate you can increase your purchasing power. You are capturing an amazing opportunity to convert your money into a favourable exchange. Gaining an additional 30% on your dollar, owning a piece of the soundest banking system in the world with a dividend yield of approximately 4% is quite a deal. This strategy leverages the American dollar in your favour by increasing your purchasing power, collecting dividends, collecting covered call premiums, and then convert your dollar into a more favourable exchange later once again when the Canadian dollar increases in value.

For my Canadian traders, well I am sure you are aware how the exchange rate simply bites a chunk out of your money. If you have been following Real Life Trading the focus is on US stocks. I am here to say the same kind of opportunities exist on the Canadian stock exchanges with the only objection of having less stocks to choose from. Lastly if you employ with Canadian stocks the same swing trading strategies Real Life Trading teaches you in your Tax Free Savings Account you can create tax-free monthly income without fear of the exchange rate. Feel free to look at the links below and exercise the same technical analysis thought by Real Life Trading with Canadian stocks and trade profitably.

Thank you so much for reading! Let us all continue to support such Real Life Trading as I do feel it is a very generous company! 

Here is the link for a list of Canadian Stocks that trade above 1 million shares daily.


Here is the link for options traded on the Canadian Stock Exchange.


Disclaimer: Any strategy proposed in this article requires proper risk management, tax planning and other risks are important to consider before implementing any strategy. The following strategies require an understanding of currency exchange and the risks associated and tax implications that can arise from investing abroad.

Roberto Bragaglia