A Beginner’s Guide to the Toronto Stock Exchange

When it comes to investing, much attention is given to the New York Stock Exchange (NYSE) and the NASDAQ to our south. However, Canada has one of the most dynamic stock markets in the world – the Toronto Stock Exchange (TSX). The TSX has become something of a home for cannabis companies, among others, and this makes it a unique market for investors.

Besides cannabis companies, the TSX lists more energy and mining companies than any other stock exchange in the world. This makes it highly watched market for analysts in these industries and it also ensure that some of the largest investment groups in Canada and beyond are active in the market.

If you are considering putting your money in the stock market, then here is a beginner’s guide to the Toronto Stock Exchange.

An Overview of the Market

There are more than 2,200 companies listed on the TSX and as of August 2019, the market had a total capitalization of CAD 1.29 trillion – making it the ninth-largest stock market in the world. While more than half of the companies listed in the market are headquartered in Ontario, companies from all over Canada use the market as their primary venue for attracting investor interest.

In terms of the most active sectors, nearly 40 percent of the companies are in the financial services sector, while energy, materials, industrials, and consumer discretionary products make up the remainder of the top five sectors. 

As far as listings go, each company on the exchange must meet requirements including working capital and other financial requirements. Just like the markets in New York and London, the TSX is highly regulated and information on all public companies can either be found on the market’s website or the Canadian Securities Administrators (CSA) SEDAR database.  For those who don’t know SEDAR stands for System for Electronic Document Analysis and Retrieval

Don’t assume that the TSX is just for big companies and the exchange overseas the TSX Venture Exchange. This exchange is for development and other early-stage companies and in some ways is like the OTC (Over the Counter) markets in the U.S.

How to Trade Stocks on the TSX?

For those who are seeking to trade stocks on the TSX, they will need a brokerage account. These days such accounts are easy to get as most banks and financial service companies offer them.

What does the account do? It will allow you to track prices of the stocks on offer and then to place buy or sell orders as you want. Keep in mind, this is not like the old days when you needed to call a stockbroker to place an order – these days orders can be placed electronically, though not directly with the exchange but with a registered broker-dealer.

Even though the act of trading stocks on the TSX or any other exchange is easy, investing in any stock market is not without risk.  As such, you might want to make sure you are up to speed with the financial analysis and with the trading strategies which will help you to be successful.

If you are not sure where to begin, options include buying books, attending seminars, and even going online to find tools that are meant to asset budding traders. This could include developing your own trading robot or working with an off-the-shelf robot to help you trade even when you are not in front of the computer.

For example, we talked to Michael D’Antonio III the Founder and CEO of StockedUp. His company teaches newbies how to trade. When talking about how Mr. D’Antonio built his company, he not only mentioned how he learned to trade and his first robot, but also how 
certain Facebook groups are an “amazing place to discuss trading ideas.”

No matter if you chose to take a course, build your own robot, or following seasoned investors on social media, you need to remember that investing in the stock market is not for the faint of heart.  As the best strategies sometimes get it wrong. For this reason, be willing to start small, model trades before you execute them, and for things to not always go according to plan.


As Mike Tyson once said, “we all have a plan until we are punched in the face”.  This sums up stock trading very well. So, expect the unexpected when you start trading.

Conclusion

As the leading venue for Canadian companies to seeking financing, the TSX plays an important role in the nation’s economy. The market is quite diverse, offering opportunities to invest in large and small companies and investing in any of these companies is as straightforward as opening an account with a broker.

In the world of investment, you don’t want to confuse the ease of trading with the ease of making money. As such, you will want to explore how to learn how to analyze public companies as well as developing and executing trading strategies before jumping into the market.

David Jackson

David is a personal finance expert, a professional male model, and an entertainment writer.