How to Trade in Canada With Scottrade

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Some U.S. investors broaden their portfolios by including Canadian securities. Scottrade is a brokerage firm that tries to attract these investors by providing a user-friendly online platform to trade in Canada. You must have a Scottrade account, which you can open online. Bear in mind that you have to deal with tax issues and currency risks when trading foreign securities.

Buy and Sell Canadian Securities

Some Canadian stocks trade on United States exchanges as American Depository Receipts. ADRs are receipts for one or more shares of a foreign stock issued by a bank that holds the actual shares. Other Canadian stocks are available as "ordinary shares," abbreviated ORD. Trading Canadian ADRs and ORDs on Scottrade is like trading domestic stocks. On your online Scottrade account, enter the stock symbol, number of shares, order type and the time frame for buying or selling shares. When a Canadian security is not available as an ADR or ORD, contact your local Scottrade broker for assistance.

Tax and Currency Issues

Under the Canadian-U.S. Income Tax Convention, brokers must withhold Canadian income tax on dividends and stock profits. You can recover the amount withheld by claiming the Foreign Tax Credit on your tax return. Trading Canadian securities also incurs currency exchange risk. Your U.S. dollars must be exchanged for Canadian dollars to buy, and then changed back when you sell. If the currency exchange rate is unfavorable, it can reduce profits or result in a loss.

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