I was wondering what strategies people use when buying and selling Canadian stocks on the TSX. Typically I like to place limit orders to execute upon the market open. My problem is that with Canadian stocks the slippage can often be 1-2 % when trading in odd lots. For instance if I place an order to buy 85 shares at $94 and the market opens at $91 I may get filled at $92.55. Or if I place an order for 130 shares at $45 I will be filled at the open price for 100 shares and then get filled at a higher price for the remaining 30 shares. This makes it expensive to rebalance ports to the point that I usually won’t rebalance a position unless my port triggers a sell. I try to buy and sell in even lots (multiples of 100, 200 shares etc) however that is not always practical when share prices are high. Even stocks that are fairly liquid like Canadian Tire can be expensive to trade in odd lot quantities. I never have this problem trading on US exchanges. Any suggestions from fellow investors trading in Canadian stocks would be greatly appreciated.
Would using a market order at open for a mid or large cap stock be a safe way to achieve the open price for odd lot shares on the Toronto exchange?
Hello MikeC,
I live in Canada and currently trade 2 different quant strategies in Canadian markets (on both TSX and CVE exchanges). Looks like you trade mostly in larger and midcaps, I trade mostly in small and microcaps. I trade with limit orders as well (usually 3% less than quote if placing orders Sunday evening/Monday am). That said, I have been filled in stages sometimes as well, i.e. for 500 shares, 1st fill @ 100 shares, 2nd at 250 shares, 3rd @ 150 shares, but usually the price is the same for each lot.
If you do get a partial fill, and the stock really gets away, I’m not sure you have much choice. I’ve not had this happen, but I’m sure it does.
Who is your broker? Maybe an issue on their end?
Hello Ryan Thank you for the reply. I am with Interactive Brokers. I am very satisfied with their execution on the us exchanges, odd lots are never a problem in achieving the open price. It seems the TSX has some weird system set up for filling odd lot orders where some market makers are making excessive profits. I may try using some market orders for the odd lot orders on stocks with decent liquidity. It’s frustrating because I usually trade portfolios with at least 10 stocks per strategy and I have several Canadian strategies so it’s not always practical to trade in even lots. I also notice the bid ask spreads seem consistently larger on the TSX to the point that I can get better execution on a US exchange for a Canadian company with listings on US & CND exchanges however I would prefer to keep my Canadian holdings in Canadian dollars.
Hi Mike,
Take a look at TD’s Webroker. I use both Interactive Brokers Canada and TD Canada.
For trades above 1,000 shares for Canadian stocks, TD 's flat 9.99 fee is cheaper than Interactive Brokers 1 cent a share. It is faster to enter trades on IB than TD but, at least for US stocks, TD appears to route to “dark pools” where I often get a better price than I can with IB (this is for US stocks).
For Canadian stocks I use TD exclusively. My Canadian holdings are dividend stocks to give me a steady income as I am retired so this are long term holds. I don’t recall getting different prices for any odd lot portion of an order. But I generally buying very large caps (the big 5 banks, BCE, etc) along with some smaller cap REITs (smaller compared to the big 5 banks). I do all my trades during the day so perhaps my experience would be different if I were trying to trade at the open price.
I’m quite impressed with TD overall. I just wish their flat fee was $5 instead of $9.99.
Brian
Brian thank you for the information. I was able to get the open price on most of my orders by using market instead on limit price orders. (keeping a close eye to make sure the stock has enough liquidity greater than 5 million AvgDailyTot(20). But it makes me nervous placing market orders, in the event of another flash crash etc.
CIBC Investor’s Edge is decent as well. If you make >150 trades per quarter (as do I), commissions are flat $4.95 per trade. They throw in the odd promotion as well, 2 weeks no commission etc.
I use this platform for all strategies, CAD and US. As I mentioned, don’t recall having an issue with odd lots, and I also trade mostly small and microcaps.
The drawback is that trading can be laborious, having to enter each trade individually, compared to what IB can offer (from what I’ve seen on the P123 platform, several trades on the same screen).