Trading Basics

A practical guide outlining the basics of trading and investing with Scotia iTRADE.

Your first online trade can be a little intimidating. But we're here to help. Spend just a few minutes here on Trading Basics and you'll know everything you need to start trading.

As a leader in investor education Scotia iTRADE® is committed to giving you the information you need to make informed investing and trading decisions.

What are stocks?
A quick look at what stocks are and how they work within your portfolio
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How Stocks are Priced
A quick guide to understanding the price of a stock, and the difference between the buy and sell price.
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Quotes vs. Execution Price
Why a stock's price might change before your trade goes through, and how to make sure you don't lose money.
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Order Types
Learn the difference between day orders, Good Till Cancelled, All Or None orders and also how to effectively use Stop Orders
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Market and Limit Orders
Learn the important benefits and risks of these two ways to buy shares –market orders and limit orders
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How to Get a Quote
Learn where you can find stock quotes on Scotia iTRADE®, so you can start trading.
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Entering a Stock Order Page
The nine simple steps you need to buy or sell shares here on Scotia iTRADE®.
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Trading Basics teaches you how to trade on Scotia iTRADE®. If you're looking for more general information about Stocks, visit our Equities page.
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What are Bonds?
A bond is a debt instrument issued usually by a Government or a Corporation at face value, or par value. As a buyer of a bond, you are paid interest (or the coupon rate) usually semi-annually – this is your return or yield on the bond. Upon maturity, you are  repaid your original investment at face value.
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How are bonds sold?
Bonds are sold between buyers at varying prices according to market conditions. If you purchase bonds between interest, or coupon payments, you must pay the seller the accrued interest (or accumulated interest) from the last coupon payment until the transaction settlement date. You will then receive a full interest payment at the next coupon date, redeeming the accrued interest you paid at the time of purchase.

Is there a minimum order?
Bond orders must be for at least $5000 face value or 5 whole bonds; each bond has a face value of $1000. Orders must be placed in increments of $1000. Minimum orders for Canadian Government T-Bills are $10,000 face value. Minimum size and increments for strip bonds varies by issue.

What is a Stripped, or Zero Coupon, Bond?
A Stripped Bond (or Zero Coupon Bond) is a bond that is sold at a discount, but pays no interest (or coupons) during its life. The discount represents your return on the original investment if the bond is held to its maturity date.

What is a Redeemable Bond?
A Redeemable Bond, or Callable Bond, allows the issuer to 'call' the bond before its maturity at the specified date(s) at a defined call price. Usually, the call price exceeds the face value, or par value, of the bond and includes accrued interest.

What is a T-Bill?
T-Bills are discount instruments issued by the federal government at a weekly auction. Generally, they offer original maturities of 13 weeks (3 months), 26 weeks (6 months) and 52 weeks (1 year).

Types of Orders & Entering an Order
An introduction to investing in bonds with Scotia iTRADE®.
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Trading Basics teaches you how to trade on Scotia iTRADE®. If you're looking for more general information about Bonds, visit our Bonds page.
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What is a Mutual Fund?
A mutual fund is an investment company that pools the money of many investors and invests it into a variety of stocks, bonds or other securities.  A mutual fund issues and redeems shares to meet demand, and the redemption value of each share is the net asset value per share and, in some cases, less a redemption fee (or rear-end load). One of the main advantages of mutual funds is that they give you access to professionally managed, diversified portfolios of investments with a small amount of capital. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.

What are the different kinds of mutual funds?
The popularity of mutual funds means that Canadian investors have a constantly growing array of funds from which to choose. Each fund adheres to a specific investment objective using a unique mix of strategies, assets, and regions or sectors of investments. The following are just some of the more common categories of mutual funds available:

Money Market Fund – A Money Market Fund is an open-ended mutual fund that invests only in short-term (but high credit quality) securities. These can include bankers' acceptances, commercial paper, repurchase agreements and government bills. Money Market Funds are not federally insured, although the portfolio may consist of guaranteed securities and/or the fund may have private insurance protection.

Fixed Income Funds – The objective of Fixed Income Funds is to generate income on a regular basis, mostly through the fixed rate of return offered by high-quality government and corporate bonds, in addition to mortgages. Fixed Income Funds are among the most secure of mutual funds, but as with all investments, there are price fluctuations as a result of interest rate movements.

Growth (or Equity) Funds – Considered the most aggressive of the mutual funds, Growth Funds (also known as Equity Funds) invest in stocks and income trusts. Because they aim to grow faster than Money Market or Fixed Income Funds, there is usually a higher degree of risk associated with Growth Funds. But even within the variety of Growth Funds, investment styles can vary greatly, with some funds investing primarily in established or 'blue chip' companies while others focus on junior or small cap companies. And, adding still more options for  an investor, are specialized funds which concentrate investing in specific sectors, countries and regions.

Balanced Funds – As its name suggests, this type of mutual fund aims to provide a balanced mixture of safety, income and capital appreciation using a combination of fixed income and equities. For example, a balanced fund may offer you a weighting of 60% equity and 40% fixed income. (Asset Allocation Funds are also Balanced Funds but typically do not hold  specific percentages of any asset class.)

Index Funds – Using a mix of equities and fixed income securities, Index Funds strive to mimic a specific index such as the S&P/TSX Composite Index, NASDAQ or Dow Jones Industrial Average. As a result, the funds' value will go up or down with the index. Because Index Funds do not involve as much work on the part of a portfolio manager, these funds will typically offer lower MERs than more actively managed mutual funds.

What are minimum purchases?
Minimum purchases refers to the lowest dollar amount or smallest share quantity required to invest in a specific mutual fund t (Minimum Initial Purchase) or to deposit into an existing mutual fund account (Minimum Additional Purchase). These amounts may be lowered for buyers participating in an automatic purchase plan.

What is a No-Load Mutual Fund?
A kind of fund that is being offered directly to the investor by an investment company and therefore comes with no  sales charge or commission.

What is turnover?
A measure of a mutual fund's trading activity during the previous year, expressed as a percentage of its average total assets. For example, a turnover ratio of 25 % means that the value of trades represented one-fourth of the assets of the fund.

How are management expense fees applied?
Management expense ratios (MERs) vary based on the type of mutual fund you hold. Equity and Balanced Funds typically have higher MERs than Money Market and Bond Funds.

What is an early redemption fee?
This fee is charged when mutual funds are redeemed before the required minimum period.  Scotia iTRADE charges an early redemption fee of 1% (minimum of $38.88) to your Scotia iTRADE account on the redemption or switch of all mutual funds (other than Scotia Money Market Funds, Dynamic Money Market Funds and Scotia Mutual Funds) held for less than 90 days.

Early redemption fees may also be charged by some mutual fund companies. Mutual fund charges imposed by the fund companies are in addition to the above fees. The minimum purchase amount for all Money Market Funds is $5,000. All other funds are subject to minimum purchase and redemption amounts as outlined in the prospectus or $1,000, whichever is greater. Switch orders are only permitted within the same load type & family of funds.

Trading Basics teaches you how to trade on Scotia iTRADE®. If you're looking for more general information about Mutual Funds, visit our Mutual Funds page.
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What are Exchange Traded Funds or ETFs? ETFs have become increasingly popular among all types of investors. Learn more about ETFs and how to trade them using Scotia iTRADE
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ETF Basics:

A 7-minute interactive introduction to exchange traded funds.
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Learn about exchange-traded funds.
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Learn about the benefits of indexing.
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Understanding ETFs:

Six learning tracks designed to give you a clear understanding of the most important topics about ETFs.
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Learn about active and index investing.
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The indexing cost advantage.
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Indexing terms in plain talk.
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iShares ETFs Canada YouTube Channel Videos:

  • Trading Best Practices
  • How Institutional Investors are using ETFs
  • Maximizing Fixed Income Opportunities
  • View Videos

Investing Fundamentals Education Video Series with Bruce Sellery
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Trading Basics teaches you how to trade on Scotia iTRADE®. If you're looking for more general information about Exchange-Traded Funds, visit our ETFs page.
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What are Precious Metals?
A precious metal is defined as a bar, ingot, coin or wafer of gold, silver or platinum, refined to a minimum purity of 99.50% in the case of gold and platinum, and 99.9% in the case of silver.

How can I purchase certificates?
You can purchase Scotiabank Gold and Silver Certificates with Scotia iTRADE over the phone to hold in your registered and non-registered accounts. Minimum size is 10 ounces for a gold certificate and 500 ounces for a silver certificate. You also have the option of using ScotiaMocatta,  a global leader in precious and base metals innovation,  to purchase physical bullion (bars and coins) for home delivery.

Are Precious Metals RSP-eligible?
Gold and silver are qualified investments in tax-deferred accounts such as RSPs and RIFs. Certificates can be held within a Self-Directed RSP at Scotia iTRADE.

Are Precious Metals taxed?
Gold, silver and platinum products are exempt from HST/GST. Palladium products are subject to HST/GST. Provincial sales tax is applicable in the following provinces: Saskatchewan, Manitoba and PEI. Sales tax is applied on the Canadian dollar value of the total cost of the transaction.

What is the difference between "Allocated" and "Unallocated" Gold? Allocated gold is bullion held by a bank on behalf of the owner. The gold is separated from other metal that may be held by the bank and is identifiable by its unique bar numbers. Unallocated gold is a claim on The Bank of Nova Scotia for the ounces entitlement to a specific quantity of gold bullion.

What is the Daily Purchase Limit?
$9,500 CDN (subject to change based on market volatility).

What are the Purchasing Hours?
8 a.m. – 12:00 a.m., EST Monday through Thursday
8 a.m. – 5:00 p.m., EST on Friday

Trading Basics teaches you how to trade on Scotia iTRADE®. If you're looking for more general information about Precious Metals, visit our Precious Metals page.
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What are New Issues and IPOs?
New issues are offerings of securities from a company going public for the first time. Initial Public Offerings, or IPOs, are the most commonly known new issues.  New Issues can also include a Secondary Offering, which involves the additional sales of securities of companies that have already gone public.

How do I find out about New Issue offerings at Scotia iTRADE?
If you are a Scotia iTRADE client, you can find information on the New Issues we offer by logging onto the website trading platform. Once logged on, go to the "Trade" tab and then click on the "New Issue Offerings" sub tab for a list of current and completed issues.

What is an 'Expression of Interest'?
An expression of interest is an order to buy a specific number of securities of a new issue. Based on available inventory, an expression of interest may get a full allocation, partial allocation or, in rare cases, no allocation.

How are New Issues allocated?
Generally speaking, new issues are allocated on a first-come, first-served basis. However, other approved allocation methods may be used. For example, if we believe a popular offering will be highly oversubscribed, we reserve the right to build a book of orders (expressions of interest) and allocate securities on a pro-rated basis.

How do I express an interest in a New Issue?
If you are a Scotia iTRADE client, you can express an interest in a New Issue by logging onto the website trading platform. Once logged on, go to the "Trade" tab, and then click on the "New Issues" tab to place an expression of interest for a specific issue. Please note, only one expression of interest is permitted per issue, per account.

Are New Issues marginable?
Yes. New issues are given loan value in the same manner as any other security that can be held with us based on Scotia iTRADE and regulatory policies. For margin information regarding a specific New Issue, please contact our Scotia iTRADE New Issues desk at 1-800-396-9547, Monday to Friday, between the hours of 8:30 a.m. EST and 4:30 p.m. EST.

What does the 'settlement date' of a New Issue mean?
The settlement date refers to the date that you, the buyer, legally becomes the owner of the security. Unlike most North American stock exchanges, where settlement dates of 3 business days are common, a New Issue purchase settlement date will often occur several weeks or more after the offering is first launched. For bought deals, it is common for the settlement date to occur 1-3 weeks after the offering is announced. For marketed deals, it is common for the settlement date to occur 1-2 months after the deal is launched. The reason for the lengthier timeline is all issuers that have filed to come to the market with a New Issue Offering must clear several regulatory steps and file a final prospectus with the regulators before the deal can be settled.

What does 'contracted' mean?
"Contracted" refers to booking the New Issue purchase into your trading account. This can only be done once the final prospectus has been filed by the issuer and accepted by the regulators. Once an issue is contracted to your account, you will receive an official order confirmation receipt and a physical copy of the final prospectus mailed to your address.

Can I cancel my interest prior to an allocation?
Yes. You can cancel your Expressions of Interest by calling the Scotia iTRADE New Issues Desk at 1-800-396-9547, Monday to Friday, between the hours of 8:30 a.m. EST and 4:30 p.m. EST. After regular business hours (4:30 p.m. EST to 9:00pm EST, Monday to Friday), you can contact the Scotia iTRADE trading and service line at 1-888-872-3388.

How will I be notified that the shares have been allocated?
Once you have been allocated shares, you will be sent a confirmation email. The status of allocations can also be viewed by logging onto the website trading platform. Click on the "Trade" tab and then the "View Orders" tab. Please note that prior to the settlement date of a New Issue, we will use a temporary symbol that is 6-12 characters long to identify the order as a New Issue order. This temporary symbol will be changed to the actual symbol of the security no later than the settlement date of the issue.

Trading Basics teaches you how to trade on Scotia iTRADE®. If you're looking for more general information about New Issues, visit our New Issues page.
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