Norbert's Gambit Questrade

Norbert’s Gambit with Questrade: Step-By-Step Guide (2024)

Are you a Canadian looking to invest in U.S.-listed securities, but just can’t get over the hefty currency conversion fees?

Well, then I have good news for you. There is a method that lets you cheaply exchange CAD and USD within an online brokerage account.

This method is known as Norbert’s Gambit. Instead of paying a conversion rate upwards of 2-3%, you pay as little as $5-10 for a conversion. To get these low fees, the brokerage I recommend you to go with is Questrade.

Ready to save big on conversion fees and keep more of your hard-earned cash? Here’s an easy-to-follow, comprehensive guide on how to execute Norbert’s Gambit with Questrade.

PROMO: $50 IN FREE TRADES

Questrade

– Canada’s leading discount brokerage
– Low costs and trading fees
– Commission-free ETF purchases

Resources
Norbert’s Gambit Calculator (Google Sheets), or (Excel .xlsx)

What Exactly Is Norbert’s Gambit?

Hold on, you may ask — why is this method called a “gambit”? Does that mean there’s a lot of risk involved? Fortunately, in reality the process is safe and quite straightforward.

Norbert’s Gambit is a technique that many Canadian investors use to cheaply exchange between CAD and USD. In a nutshell, it involves buying, journaling, and then selling shares of a stock that is transacted in both CAD and USD currencies.

There’s a specific exchange-traded fund (ETF) that’s used for Norbert’s Gambit. It’s called the Horizons U.S. Dollar Currency ETF, and its price reflects the conversion rate between CAD and USD. The ticker symbols are DLR.TO which is denominated in Canadian dollars, and DLR.U.TO which is denominated in U.S. dollars.

The key here is that you can exchange DLR.TO shares with the same number of DLR.U.TO shares (also known as journaling the shares).

Horizons DLR
Now you might be wondering: how much does this strategy actually save me in fees? Is it worth executing this strategy? Everybody’s situation is different, so let’s review the factors you should consider when deciding whether or not to use Norbert’s Gambit.

When To Use Norbert’s Gambit

The main benefit of Norbert’s Gambit is to be able to exchange between CAD and USD in an investment account without incurring the currency spread that brokerages would charge.

The advantages quickly scale up the more money you need to exchange.

Let’s say you wanted to convert $10,000 CAD. At a 2% conversion fee, you’d be paying around $200 in exchange fees. However, with Norbert’s Gambit you would only need to pay about ~$16 in commission fees.

That’s over 10x less in fees. This is because instead of incurring a percentage of the total amount converted, your costs are mainly made up of the brokerage’s stock trading fees.

Here is a definitive list of factors to determine whether or not Norbert’s Gambit is right for your situation.

Norbert's Gambit Considerations

Do use if...
  • You’re converting more than $1,000 – The more money you’re exchanging, the greater the benefits.

  • You can wait up to 4 business days to complete the conversion – Ensure that you don’t need the money within 4 business days, and that the opportunity cost doesn’t exceed the conversion fee savings.

  • You’re converting CAD to USD – When you’re converting from Canadian to American dollars, you lock in your exchange rate the second your order is filled, essentially eliminating currency risk since your holdings are now in a US cash equivalent. The price of DLR.U.TO does not fluctuate unpredictably.

  • You’re looking to buy U.S.-listed ETFs in an RRSP account – You’ll be able to avoid U.S. withholding taxes on U.S.-listed ETFs held in an RRSP.

Don't use if...
  • You’re converting less than $1,000 – You’re probably better off keeping things simple at this point.

  • You need to convert in under 4 business days – You will need to wait a total of 3-4 business days for the trade to settle. If you need quick access to your converted funds, don’t use Norbert’s Gambit.

  • You’re concerned about currency risk – When you’re converting from the USD to CAD direction, you’ll be exposed to currency risk since you’re not locking in the conversion rate until you sell DLR.TO at the very end. The price of DLR.TO can fluctuate while you’re waiting for your shares to journal.

  • You’re looking to buy U.S.-listed ETFs in a TFSA or non-registered account – It may be more cost-effective to invest in their non-hedged Canadian ETF equivalents.

If you have decided that Norbert’s Gambit is the right strategy for your situation, let’s now dive right into the step-by-step instructions to perform Norbert’s Gambit on Questrade.

Create a Questrade Account

Before you can perform Norbert’s Gambit with Questrade, you’ll first need to have a self-directed Questrade account.

Questrade is my online brokerage of choice for the do-it-yourself investor – it’s the platform that I have personally used to invest for the last 7 years (since 2017). Importantly for Norbert’s Gambit, you can easily trade U.S. stocks since you’re able to have both CAD and USD in your account at the same time.

Don’t have a Questrade account? You can sign up below to receive a $50 account rebate.

PROMO: $50 IN FREE TRADES

Questrade

– Canada’s leading discount brokerage
– Low costs and trading fees
– Commission-free ETF purchases

How To Perform Norbert’s Gambit

Step 1: Calculate # of DLR.TO Shares to Buy

The first step is to figure out how many shares of DLR.TO you need to buy.

The easiest way to calculate this step is to use our Norbert's Gambit calculator. It is based on the following formula:

# of DLR.TO shares to buy = CAD to convert / Price of DLR.TO

Here's a real-life case of my own Norbert's Gambit to serve as an example. I wanted to convert $3,900 CAD to USD. At the time I purchased DLR, it was trading at $13.03. I calculated that I should buy 3900 / 13.03 = 299.31 shares of DLR.TO, but rounded up to 300 shares for a clean number (and to avoid ECN fees which I discuss in the 'Fees Explanation' tab).

Step 2: Calculate Cost of Norbert's Gambit

Before committing to Norbert's Gambit, it's a good idea to know exactly how much you'll be paying in brokerage fees when converting between the currencies. However, there are several nuanced details to understand.

Fortunately, I've done the legwork for you if you don't want to calculate the fees yourself - simply use our Norbert's Gambit calculator. You can play around with it to see how much in fees you'll be paying in different scenarios. If you need an offline version, click here to download the Excel spreadsheet.

Norbert's Gambit Calculator Questrade Fees Spreadsheet

If you're curious as to how the exact costs are calculated, you can take a look at the 'Fees Explanation' tab which provides the complete details.

Once you have determined the costs and wish to proceed, it's time to actually execute Norbert's Gambit with Questrade.

Step 3: Open Questrade Edge

Once you are logged into your Questrade account, you can open Questrade Edge at my.questrade.com/trading/

For the purposes of performing Norbert's Gambit, you will want to use Questrade Edge, their original trading interface. You can still do Norbert's Gambit on their updated trading interface. However, Questrade Edge enables you to easily see both the bid and ask price of a stock at the same time.

You can also enable Questrade Edge as your default trading experience with the following steps.

questrade edge

Step 4: Buy DLR.TO During Trading Hours

We will now begin the actual process of Norbert's Gambit by buying shares of DLR.TO on the Questrade trading platform.

The great thing about Questrade is that there are no commission fees for buying ETFs, so you only need to decide whether or not you want to incur ECN fees.

Deciding whether to incur ECN fees means deciding whether to buy at the bid price or the ask price. Essentially, you are choosing between waiting and paying less or not waiting and paying a bit more. The decision will vary depending on your specific situation.

Personally, I usually just take the ECN fees since every $5,000 converted corresponds to a measly ~$3.50 ECN fee, or a 0.07% additional conversion fee. However, if you are buying thousands of shares, avoiding ECN fees can help you save a lot.

Choose ONE of the following options below, depending on your own preferences.

Option 1: Buy at the ask price (incur ECN fees)

If you want your buy order to be filled immediately and don't mind the ECN fees, just set a limit order to buy DLR.TO at the ask price (I would recommend this over placing a market order just to be safe).

Locate the Order entry box to the right, and follow the instructions below. Note that the infographics are based on the Questrade Edge interface.

How To Buy DLR.TO Shares Questrade Infographic

Option 2: Buy at the bid price (avoid ECN fees)

To avoid ECN fees, you must be willing to wait longer for your buy order to be filled. You also take the risk of your order never being filled at all if the market price never reaches your limit price. In particular, place a limit order to buy DLR.TO at or below the bid price. It may take anywhere from a couple minutes to a couple days for the trade to be executed due to the relatively low trading volume of DLR.

In the Questrade Edge trading interface, locate the Order entry box to the right, and follow the instructions on the infographic below.

How To Buy DLR.TO Shares Questrade No ECN Fees Infographic

Step 5: Journal Your DLR.TO Shares to DLR.U.TO Shares

Now that you have bought DLR.TO shares, you can call, email, or live chat with a Questrade representative to journal over the shares.

I prefer to use the live chat feature. I've used it many times now and the agents always know what you're requesting and make the process very simple to follow. You also have the ability to save the chat logs at the end for your reference.

Journal DLR Shares Infographic

If you prefer using email, you can also simply email support@questrade.com with your account number, the shares that you would like to journal, and the quantity of shares.

Step 6: Verify Currency Settlement Settings

Note: This step only applies to registered accounts (TFSA or RRSP). If you are doing Norbert's Gambit with a margin account, skip this step.

In the Account Management tab, ensure that the currency settlement setting is set to "currency of transaction". This should be the default setting, but it is very important that this is correct. Otherwise, when you sell DLR.U.TO shares you may receive CAD instead of USD and Norbert's Gambit won't work.

To find this setting, click your name on the top-right and click on "Settings" to access the Dashboard.

On the Dashboard, locate "Account Management" at the top of the page. Hovering this text will let you select "Account Management" again in the drop-down menu.

Account Management Settings

At the bottom of the Summary section, verify that the currency settlement is set to the currency of transaction.

Step 7: Sell DLR.U.TO in 3-4 Business Days

Now you will need to wait 2 business days for the trade to settle, and an additional 1-2 days for Questrade to journal the shares. This is a total wait of 3-4 business days for DLR.U.TO shares to appear on your account.

As mentioned earlier, note that when converting CAD to USD, waiting a few business days does not impose currency risk. The conversion rate you pay is locked in the second your buy order is filled. This is because the moment you own DLR.TO shares, you are basically holding a U.S. cash equivalent. As a result, you can use the historical graph of DLR.U.TO to predict your selling price within $0.01.

DLR.U.TO price history chart

However, the same does not apply with a USD to CAD conversion. When you convert USD to CAD, the conversion rate you pay is locked in at the very end, when you sell DLR.TO. Therefore, currency risk is a factor to take into consideration when you are converting from USD to CAD using Norbert's Gambit.

When the journal is completed, you will see your DLR.U.TO shares appear in your Positions tab on the trading page. Click on the shares and click on the Buy/Sell button, or type in "DLR.U.TO" in the "Order entry" field on the right of the trading page.

At this point, the selling process is very similar to the buying process. Once again, decide whether you want to incur ECN fees or avoid them, noting that there are commission fees when selling ETFs.

When selling, if you want to avoid ECN fees, you need to sell at the ask price or higher to add liquidity. If you want don't mind incurring ECN fees, you can sell immediately at the bid price. I recommend selling immediately because it can take a long time to sell DLR.U.TO at the ask price.

Eventually, you will need to convert your USD back to CAD, which follows a similar process as converting CAD to USD.

Step 1: Calculate # of DLR.U.TO Shares to Buy

The first step is to figure out how many shares of DLR.TO you need to buy.

The easiest way to calculate this step is to use our Norbert's Gambit calculator. It is based on the following formula:

# of DLR.U.TO shares to buy = USD to convert / Price of DLR.U.TO

Step 2: Calculate Cost of Norbert's Gambit

Similar to the CAD to USD conversion, you can use our Norbert's Gambit calculator which has an option to calculate the cost of Norbert's Gambit for a USD to CAD conversion.

If you're curious as to how the exact costs are calculated, you can take a look at the 'Fees Explanation' tab which provides the complete details.

Step 3: Buy DLR.U.TO During Trading Hours

Now comes the process of actually buying shares of DLR.U.TO on the Questrade trading platform.

You must decide whether you want to incur or try avoiding ECN fees.

If you want your buy order to be filled immediately and don’t mind the ECN fees, set a limit order to buy DLR.U.TO at the ask price (to be safe, don’t place a market order).

If you want to try avoiding ECN fees, place a limit order to buy DLR.U.TO at the bid price, and set the order duration to GTC (Good ’til Cancelled). It will typically take several days to a few weeks for the trade to be executed due to the relatively low trading volume of DLR.

Based on my own experience, I wouldn’t recommend buying DLR.U.TO at the bid price for several reasons.

At the start of 2020, I was looking to convert some USD back to CAD. So I set a buy limit order on DLR.U.TO at the bid price on January 9.

The trade finally executed on January 22, a whole 13 days later.

What’s worse, I ended up incurring ECN fees. I learned after the fact that if a trade is executed as soon as the market opens at 9:30, it is considered removing liquidity and thus you’re charged ECN fees anyway (not that they were a lot to begin with).

Therefore, I recommend just buying DLR.U.TO at the ask price so that you can immediately request to journal the shares, reduce your currency risk, and reduce the opportunity cost of having your money tied up.

Step 4: Journal Your DLR.U.TO Shares to DLR.TO Shares

Now that you have bought DLR.U.TO shares, you can call, email, or live chat with a Questrade representative to journal over the shares.

If you prefer using email, you can simply email support@questrade.com with your account number, the shares that you would like to journal, and the quantity of shares.

Here is an infographic on how to use the live chat feature to journal your shares.

Journal DLR Shares Infographic

Step 5: Verify Currency Settlement Settings

Note: This step only pertains to registered accounts (TFSA or RRSP). If you are doing Norbert’s Gambit with a margin account, you do not need to apply this step.

In the Account Management tab, ensure that the currency settlement setting is set to “currency of transaction”. This should be the default setting, but it is very important that this is correct.

To find this setting, click your name on the top-right and click on “Settings” to access the Dashboard.

On the Dashboard, locate “Account Management” at the top of the page. Hovering this text will let you select “Account Management” again in the drop-down menu.

Account Management Settings

At the bottom of the Summary section, verify that the currency settlement is set to the currency of transaction.

Step 6: Sell DLR.TO in 3-4 Business Days

Now you will need to wait 2 business days for the trade to settle, and an additional 1-2 days for Questrade to journal the shares. This is a total wait of 3-4 business days for DLR.TO shares to appear on your account.

When the journal is completed, you will see your DLR.TO shares appear in your Positions tab on the trading page. Click on the shares and click on the Buy/Sell button, or type in “DLR.TO” in the “Order entry” field on the right of the trading page.

At this point, the selling process is very similar to the buying process. Once again, decide whether you want to incur ECN fees or avoid them, noting that there are commission fees when selling ETFs.

When selling, if you want to avoid ECN fees, you need to sell at the ask price or higher to add liquidity. If you want don’t mind incurring ECN fees, you can sell immediately at the bid price.

As explained earlier, the effective conversion rate is decided at the this step when you sell DLR.TO. This is because while you are waiting for the shares to journal, the strength of CAD relative to USD may rise or fall.

Types of Costs in Norbert's Gambit

Your total cost of Norbert's Gambit is broken down into the following:

  1. Brokerage fees (such as commission fees and ECN fees)
  2. Implied costs (such as costs from buying at the bid vs. ask price and fluctuations in the exchange rate while waiting for your shares to journal)

Brokerage Fees

Commission Fees

The great thing with Questrade is that when buying ETFs (such as DLR.TO), you do not pay any commission fees. Questrade only charges commissions when you sell ETFs (such as when you sell DLR.U.TO).

Questrade charges a fee of 1 cent/share (min $4.95, max $9.95) to sell ETFs.

ECN Fees

There is another potential fee to be aware of (separate from the commission fee), which are called ECN fees. These are smaller than commission fees, and are only $0.0035 per share. Note that ECN fees can apply on both buying and selling ETFs, but are avoidable if you really want to only pay the commission fee.

When are ECN fees applied? ECN fees are mainly charged when you are removing liquidity from the market. In other words, they are usually charged when you place a market order, a limit order at the ask price when purchasing shares, or a limit order at the buy price when selling shares.

A simple rule of thumb to determine if you're being charged ECN fees is this: if you place an order and it is filled immediately, you are most likely paying ECN fees on that order.

You may also wonder if the fees are in CAD or USD. Both types of fees (commission and ECN) are calculated in the currency of the trade. So if you incur ECN fees while buying DLR.TO, it is in CAD. But if you incur commission and ECN fees while selling DLR.U.TO, it is in US dollars!

One more thing to note about ECN fees: they are also charged if you don't purchase/sell DLR in multiples of 100 shares, even if you are adding liquidity. This can be best explained through an example. The first time I tried Norbert's Gambit, I bought 360 shares of DLR.TO. Even though I placed a buy limit order below the ask price to avoid ECN fees, I still ended up paying ECN fees on 60 of the 360 shares that I bought. This came out to an insignificant $0.21 ECN fee, so in the end, not a big deal. In fact, the most you could pay is 99 * $0.0035 = $0.3465. But, it's good to know when you're verifying your trades how everything adds up. Better to know the ins and outs of the process than to be left surprised!

Don't fuss over too much about ECN fees; they only matter more if you are converting large amounts of CAD and USD. The main idea is this: you're paying an additional $0.0035 per share if you want to immediately buy or sell DLR shares.

Calculating Your Total Brokerage Fees

Norbert's Gambit Conversion Fees Graph

The graph above helps you roughly determine how much you'll be paying in fees, depending on how many shares of DLR.TO you buy and whether you are adding or removing liquidity. View this graph in the spreadsheet to pinpoint the cost of your specific Norbert's Gambit.

Let's continue with my example in Step 1 of converting $3,900 CAD to USD to illustrate how to calculate your fees. First, we need to determine the fees that would be incurred from buying DLR.TO. I decided I wanted to avoid ECN fees when buying my shares. So I set a buy limit order below the ask price (at the bid price). Here I paid $0 in both commission and ECN fees since I am adding liquidity and Questrade doesn't charge commission when buying ETFs.

Second, calculate the fees that would be incurred after journaling and selling DLR.U.TO. This time I decided to incur ECN fees since I wanted to sell as soon as I could. So I placed a sell limit order for 300 shares at the bid price to immediately receive my ~$3,000 USD. I ended up paying $4.95 USD in commission, plus an additional 300 x $0.0035 = $1.05 USD in ECN fees. All in all, I paid a total fee of $4.95 + $1.05 = $6 USD.

This comes out to a 0.2% conversion fee!

Implied Costs

In addition to the fees you pay to the brokerage when performing Norbert's Gambit, you will also incur implied costs. Implied costs take into account the total difference in cost between using Norbert's Gambit and the ideal perfect world method of an instantaneous currency conversion at the "true" exchange rate. Implied costs include whether you buy at the bid vs. ask price (not usually a big concern for DLR since the bid-ask spread is usually $0.01) and the currency risk incurred when converting from USD to CAD.

Note that when I refer to the implied cost arising from currency risk, I do not simply mean the inherit risk of holding USD. That is a risk that you will take regardless of whether you exchange using Norbert's Gambit or not. The currency risk associated with Norbert's Gambit is the additional risk taken relative to the perfect world scenario of being able to convert without delays. In the case of Norbert's Gambit, currency risk arises from having to hold USD for a few extra days when converting USD to CAD while you wait for the DLR shares to journal.

You’ve Completed Norbert’s Gambit!

You have successfully completed the conversion at this stage, congratulations! To make sure that your fees match what you expected, click on Reports > Account Activity from the Dashboard to view your transaction history.

Account Activity Report

You should see something like this.

Account Activity

Note that if you do not sell in multiples of 100 shares, then your sell order may occasionally be split up into two parts in the account activity. This won’t affect your conversion fees (i.e. you won’t get charged commission twice). Simply add the two commission fees together to arrive at your expected total.

And that’s all there is to it. Enjoy saving on conversion fees and buying securities across the border!

Frequently Asked Questions (FAQ)

Over the years of helping hundreds of thousands of readers with Norbert’s Gambit, I’ve answered a lot of common questions which I have assembled in this FAQ section. However, if you still have any unanswered questions, feel free to leave a comment below.

Is Norbert’s Gambit safe? What are the risks associated with Norbert's Gambit?

Norbert’s Gambit is a safe and legal way to exchange between CAD and USD without incurring the exorbitant conversion fees that investment brokerages charge.

The main risk is currency risk as the CAD and USD exchange rate is not static and can fluctuate over the time it takes for you to buy, journal, and then sell your DLR shares.

How long does Norbert's Gambit take to complete?

Once you’ve bought your DLR shares and requested Questrade to journal them, you will need to wait 2 business days for the trade to settle, and an additional 1-2 days for Questrade to journal the shares. This is a total wait of 3-4 business days from the date you bought the shares.

When the journal is completed, you will see your journaled shares appear in the Positions tab of the trading interface, at which point you’ll be able to sell the shares.

Can you do Norbert's Gambit in a non-registered (margin)/TFSA/RRSP account?

Yes, you can do Norbert’s Gambit in any of these accounts.

Why is it taking so long to sell my DLR.U.TO after I converted to USD?

You will probably run into this issue if you are trying to sell DLR.U.TO at the ask price. This is due to the inelasticity of the price of DLR.U.TO. It could take upwards of several weeks for this trade to execute. Furthermore, to guarantee no ECN fees are incurred, you need to put in a new sell limit order at the start of every trading day. Otherwise, if your trade executes at the market opening bell, it is considered removing liquidity and thus you’re charged ECN fees.

Due to the tedious nature of selling at the ask price and the time value of money, I recommend incurring the additional fees and selling DLR.U immediately as soon as it appears in your account.

Can I journal my shares using another interlisted stock that is not the DLR ETF?

The DLR ETF is an ETF designed to track the currency conversion rate between USD and CAD. By executing Norbert’s Gambit using DLR, your CAD/USD conversion rate will closely mimic the actual conversion rate. On the other hand, If you’re journaling using a different interlisted stock, then you incur the additional risk of the underlying stock dropping in price between the time you buy, journal, and sell shares of that stock.

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134 Responses
  1. Anonymous

    Thanks for this.

    I looked on Questrade and they say it costs minimum $195 to buy or sell an International stock or ETF. USA is international so if this is true that would be the cost to buy and sell USD stock and ETF. Is that your understanding?
    Thanks!

  2. D Badu

    Thanks for the answer to my last question.
    My question now is, why is there is a ECN fee of not buying stock in multiple of 100’s. And does this only apply to trading DLR/DLR.U or any other stocks? And how much is this ECN fee if you incurred them?

  3. Markus

    If I understand correctly then the risk asymmetry between CAD to USD vs USD to CAD conversion comes from the fact that the Horizons U.S. Dollar Currency ETF is tracking the US dollar, relative to CAD.

    For an equivalent no risk USD to CAD conversion you would have to use a different ETF, one that is tracking the Canadian dollar. Is there such an ETF?

  4. Jeff B

    When an advisor opened a RESP account for me 15 years ago, it never occurred to me nor was it explained to me that there would be forex on Apple, Disney, J&J and a couple more US holdings upon purchase and sale. I have since moved on to manage myself through Quest Trade and am still stumped whether NB works also for RESPs and if not, how would you recommend I eventually withdraw these US holdings with as little forex as possible?

  5. David Badu

    Thanks for the guide, great work. Assuming I calculated the number of shares to be bought, and after the purchase there is zero amount left in my brokerage account. Now assume there is some fees that need to be paid (commission, ECT). How will these fees be taken if there is zero dollars in my account now?

    1. Hi David,
      When you’re selling shares on Questrade, the ECN fees & commissions are subtracted straight from the sale’s proceeds, so you’ll be able to sell even if you have a $0 balance in your account.

  6. Hanah

    Just another internet stranger saying thank you for this great guide! I completed my first gambit and it went off without a hitch thanks to you.

    1. Hi Shelly,

      If you’re performing Norbert’s Gambit in any registered account (TFSA, RRSP, FHSA), then there are no direct income tax implications to worry about.

      However, in a non-registered margin account, you’ll need to keep track of the capital gains or losses associated with buying/selling DLR. This involves calculating the adjusted cost basis (ACB) and proceeds from sale. Ensure that you factor in commissions and are converting USD amounts to CAD accordingly in the calculations.

  7. G Fitz

    Thanks for the Article!
    I use this regularly to transfer my usd for my vacation property expenses.
    One tip for users: QT doesn’t allow USD transfers to a US account based in the US. The RBC account I had set up (RBC U.S. Direct Checking) wouldn’t work. So I added a second RBC USD account in my personal RBC account.
    So I first withdraw to the canadian based USD account and then from there transfer to the USA based USD account so I can pay my bills etc.

  8. Martin

    The article glosses entirely over the complication of transferring non-trivial amounts of US dollars to a Questrade account. Questrade offers a kind of automatic method, which is supposed to take 20 business days. The “fast way” is to do a wire transfer, which at best requires a long phone call with the bank, and fees that hover around $40, which makes the whole gambit a losing proposition unless the amount is on the thousands.

    1. Jack Beanstalk

      This is not the case. You will 3 bank accounts to make this work without wire fees.
      1) A bank account in USD in the USA (e.g. RBC Bank USA)
      2) A bank account in USD in Canada (e.g. RBC Royal Bank)
      3) A bank account in CAD in Canada (e.g. RBC Royal Bank)

      In my case, I want to move USD into CAD. I transfer money from RBC Bank USA to RBC Royal Bank in USD. I then deposit the USD into my Questrade account in USD using a pre-authorized deposit (max transaction in 100K a day). Then I do the Norbert Gambit. Then I transfer money from Questrade to RBC Royal Bank in Canada.

  9. John Vandergaast

    I would like to transfer US cash from a non registered US trading account to a non registered Canadian account. Is this still possible using Norberts Gambit? Do I need the two accounts first?

  10. Al

    Hi there, enjoyed reading your article. Can I perform the same journaling process with another brokerage firm, like a bank broker? Would the process be as seamless with their customer service people? Any unknowns when dealing with the bank brokerages? Ty

  11. Ryan

    Wow! What a great article. As a new investor just getting started, thank you so much for this (and the 2023 update). I’m just hoping to get some clarification on the last “Do vs. Don’t”:

    Do Use if…
    “You’re looking to buy U.S.-listed ETFs in an RRSP account – you’ll be able to avoid U.S. withholding taxes on U.S.-listed ETFs held in an RRSP.”

    Don’t use if…
    “You’re looking to buy U.S.-listed ETFs in a TFSA or non-registered account – it may be more cost-effective to invest in their non-hedged Canadian ETF equivalents.”

    What are the disadvantages of using a TFSA instead of a RRSP for Norbert’s Gambit?

    1. Hi Ryan,

      Glad this guide has been useful to you.
      Depending on your investing goals, it’s usually perfectly fine to do NG in your TFSA (I do it often myself). That do vs don’t point only applies in the context of buying US-listed ETFs. For example, if you are looking to buy an ETF tracking the S&P 500 in your TFSA, two options you have are VOO (bought in USD) and VFV (the non-hedged CAD equivalent), which have similar MERs. The argument is, why convert your CAD to USD to buy VOO when you could just buy VFV using CAD? Then you wouldn’t have to convert CAD to USD and do NG in the first place. Since the 15% withholding tax cannot be avoided in the TFSA, that is only a consideration when buying in an RRSP (where it can be avoided), which is why it may make sense to do the conversion if you’re using your RRSP.

      That being said, many people use NG as a general method to buy all types of USD stocks like AAPL, AMZN, etc. If you were going to buy these in your TFSA regardless, of course NG can be used to convert your CAD to USD.

  12. Melanie

    Thanks for the helpful information! Is there any advantage in doing the norbert’s gambit in a TFSA or RRSP account versus a margin account?

    1. The main advantage of using a registered account like a TFSA or RRSP is that you won’t have to worry about the tax implications of Norbert’s Gambit.

      If you are buying and selling DLR.TO or DLR.U.TO in a margin account, you’ll need to track your adjusted cost basis and capital gains/losses in Canadian dollars like any other capital transaction in a non-registered account.

  13. Jimmy

    “As mentioned earlier, note that with a CAD to USD conversion, waiting a few business days does not impose currency risk. The conversion rate you pay is locked in the second your buy order is filled.”

    “However, the same does not apply with a USD to CAD conversion. When you convert USD to CAD, the conversion rate you pay is locked in at the very end, when you sell DLR.TO.”

    Does this mean that there is no currency risk if you sell DLR.U.TO at the ask price to avoid ECN fees (when converting CAD to USD), but you should sell DLR.TO at the bid price (when converting USD to CAD) since there could be fluctuations if you try to avoid ECN fees?

    1. Essentially, you are correct in your understanding Jimmy.

      However, if you are considering selling DLR.U.TO without incurring ECN fees, then make sure you understand that in addition to currency risk, you should also factor in the effort it will take to sell your shares. Personally the one time I tried doing that, it took me nearly two weeks to sell. Also, if the trade executes when the market opens, you can incur ECN fees anyways. Also factor in the opportunity cost of the time your money is held up. So personally I think it’s more effort than it’s worth.

  14. Mike

    I believe, the ECN fees are charged when buying DLR.TO (CAD) irrespective if you have the right amount of shares in lots of 100 or not at .0035 as of today Aug 23, 22

    1. Hi Mike,

      If you buy DLR.TO at the ask price and your order is filled immediately, then you are removing liquidity and ECN fees are charged for all your shares regardless of whether you buy in lots of 100. You’re still able to avoid ECN fees on lots of 100 when you buy DLR.TO at the bid price or lower (i.e. adding market liquidity).

  15. David Carr

    With a margin account, it is best to short DLR on the US side when buying on the CDN side. Then journal. After T+2 settling, the journaled shares cancel the short with no exposure to currency.

  16. Jeff Q

    Great article. I’m trying it as I type this. Question though; after I request that the DLR.to shares be journaled, does it get journaled at the cost of the stock the moment I contacted the Questrade support line to ask for it to be journaled? The reason I ask … the price has increased 10 cents in the last day, which would be a tidy profit if the journaling was delayed for a time. Thanks in advance.

    1. Journaling is based on the quantity of shares, not the price of DLR when you contact Questrade support. For example, if you bought 100 shares of DLR.TO and asked to journal the shares to DLR.U.TO, you will get 100 shares of DLR.U.TO. The price of DLR only matters at the moments you purchase and sell shares of the stock.

  17. Quang Nguyen

    Hi, thanks for the great article and spreadsheet! Just one thing I don’t understand is (for CAD to USD conversion on the spreadsheet) the complicated formula for Commission fee (USD). In your article you show $4.95 in the screenshot. But in your spreadsheet the formula is “IF($H$19*$H$3<$H$4,$H$4,IF($H$19*$H$3<$H$5,$H$19*$H$3,$H$5))". Isn't it just $4.95 USD?

    Thank you.

    1. Quang Nguyen

      Actually I understand now. It’s $4.95 min but 1cent a share, so your fancy formula calculates the commission for more than 495 shares. Thank you!

  18. reef

    Thanks for the rundown, it’s much appreciated.

    Was hoping to clarify my understanding – I don’t see how when going from CAD -> USD, the rate is locked in when you initially buy DLR. You eventually will have to sell DLR.U of course, and the price of DLR.U changes over time – ie. was at 10.11/10.12 a year ago and now 10.07/10.08.

    If I held DLR.U over that time and didn’t sell it, I would have lost .03/share. So how is it locked in?

    1. The price of DLR.U changes very predictably and slowly. The reason for this change is due to the management fee of the ETF. You should not be holding onto DLR.U for a year, as it should only be held during the Norbert’s Gambit process.

      Norbert’s Gambit generally does not require more than 5 business days to execute from start to finish, so the management fee should not tangibly affect your exchange rate.

  19. Alistair

    I was curious about the time where you actually “lock in your exchange rate”.
    In CAD to USD, the moment you buy DLR.TO, you have locked that exchange rate.
    In USD to CAD, the moment when you buy DLR.U.TO, journal it, and when you SELL DLR.TO locks that exchange rate from USD to CAD? [and essentially whether you are holding USD cash or DLR.U.TO, or DLR.TO its all USD right?]

    I hope I am understanding this correctly!
    Thanks 🙂

  20. Bern

    Tomorrow I hope to convert over $20,000 (CAN) into US funds to pay down a loan in my margin account. Should I use Norbit’s Gambit. I was told by Questrade that tomorrow I can request to be transferred to their Trading Desk which can authorize a preferential rate. Based on your article, I believe I am better off following the Norbit’s Gambit process. Right?

    1. Hey Bern,

      Using Norbert’s Gambit will be cheaper than having Questrade directly convert your CAD to USD. It will take about 3-4 business days from start to finish, but overall you should save more after taking conversion and interest fees into account.

  21. Eric

    Hey Jason

    I tried placing a limit order for 3500 dlr.to shares at the bid price (aswell as below the bid price) and reagrdless of what limit price I set, Questrade is about to charge me ecn fees equalling $12.25 (3500 x $0.0035). I believe I followed your instructions correctly. Any advice?

    Thanks!
    Eric

    1. Hi Eric,

      Are you seeing this in the order confirmation pop up window that appears right before you send the order? That commission amount will always show ECN fees included, regardless of whether you actually pay it or not. It is an estimate and not necessarily the actual fee you may end up paying.

  22. Jeff

    Hi Jason,

    Thanks for the well written article. After some research, I plan on using another inter-listed stock to perform the gambit.

    Just a question on the part where you talk about placing a limit order to avoid ECN fees. Basically there is a risk that the bid/ask price changes when I place my limit order, thereby making it fill immediately, and I get charged the fees right?

    So would the only way to minimize this risk, be to look at the stock’s prices for say a few days, note down how big the immediate fluctuations can get, and then price my order accordingly?

    Thank you.

    1. Hi Jeff,

      Essentially, you’re correct. When placing a trade, you’re either considered to be “adding liquidity” or “removing liquidity”, and this depends on what you set your limit price to be. In general, you are adding liquidity if your order does not execute immediately (no ECN fees charged), and removing liquidity if your order fills right away (ECN fees charged).

      Depending on how much the interlisted stock fluctuates, you can set a limit order a few cents further away from the bid/ask to have a higher chance of adding liquidity. Note of course that orders that add liquidity are not guaranteed to be filled if the stock price does not reach your limit price.

  23. Sophie

    Hi, Jason,
    Regarding USD to cad conversion. If I have decided that I need Cad, I can try to get more CAD,if I don’t mind waiting until DLR.U.TO moves to a favorable price, Can’t I? Thank you.

    1. Hi Sophie,

      The price of DLR.U.TO does not change much – I think you’re referring to DLR.TO.

      When converting from US to Canadian Dollars, you could wait for the price of DLR.TO to increase before performing Norbert’s Gambit. However, you can only sell DLR.TO at the end of the journaling process, which takes 3-4 business days from the time you request the journal. During that time, the price of DLR.TO can increase or decrease. You can sell at any time after the shares are journaled, and even hold the shares if you are still expecting the price of DLR.TO to increase.

  24. John

    Thank you Jason for your very helpful guide, especially for those who are a newbie like me.

    May I have a question that why price of DLR.TO is varying frequently and more than DLR.US.TO, or at least not as stable as DLR.US.TO? Because of frequent fluctuation in price of DLR.TO, is it worth managing/waiting to buy DLR.TO when it’s price is supposedly low?

    Thank you.

    1. Hi John,

      Holding DLR is essentially like holding USD cash. Since DLR.U.TO is already denominated in USD, it won’t move much at all.

      On the other hand, DLR.TO is denominated in CAD. This means that the price of DLR.TO fluctuates according to what the USD to CAD conversion rate currently is. So for example, if you wanted to convert CAD to USD while the Canadian Dollar is stronger, then yes you could try waiting to buy DLR.TO if it drops lower.

      As long as you have not yet bought any shares, you’re still holding CAD. But once you buy DLR.TO, you’ve locked in your CAD to USD conversion rate and the number of shares bought, and all that’s left is to journal and sell DLR.U.TO.

      1. John

        Thank you very much Jason for your prompt and informative reply.

        When I place an order to buy DLR.TO, do I have to wait until the order is filled then I can start contacting Questrade for journaling or I can contact Questrade for journaling immediately right after I place the order?

        Thanks a lot.

        1. When you place the order, you don’t actually own any shares yet. You need to wait until the order is filled or executed. Once this happens, you are able to contact Questrade to journal the shares. Keep in mind though it will take about 3-4 business days for the journal to show as completed.

          Good luck!

  25. Chump

    I’ve been waiting for DLR.TO.U. I’ve had a GTC limit order for Ask price since Feb 2nd. It’s almost 3 weeks now and I’m starting to question if something broke somehow in the queue. Every day the price hits the Ask price probably a dozen times and yet my order’s still waiting. Anyone else wait weeks for a sale to go through?

    1. Hi Chump,

      I’ve had similar experiences trying to sell DLR.U at the ask price. It can be a tedious waiting process and the opportuntiy cost of having your money tied down for too long likely exceeds the cost savings of selling DLR.U at the ask price.

      I recommend incurring the additional fees and selling DLR.U immediately if it’s taking you weeks to sell, at that point time value of money kicks in and it’s just not worth it.

  26. Christian

    Hey Jason,

    I was just curious about your reason not to use the gambit: “You’re looking to buy US-listed ETFs in a TFSA or non-registered account – it may be more cost-effective to invest in their non-hedged Canadian ETF equivalents.” Could you provide a little extra info?

    For context, I am planning to use the gambit to roughly $110K to USD in order to buy several US-listed ETFs within a TFSA account. Seeing your warning got me a bit worried this might be a mistake!

    Thanks for any additional info you can provide!

    1. Hi Christian,

      There’s something called withholding tax when you’re a Canadian receiving U.S. dividends. Essentially, U.S. dividends are applied a 15% withholding tax when not held in an RRSP. So in a TFSA, instead of converting CAD to USD to buy a US-listed ETF, you could consider instead buying a Canadian listed ETF that tracks the same underlying index.

      For example, if you wanted to buy an ETF that tracks the S&P 500, one option is SPY which is bought with USD. However, you could also buy VFV, which also tracks the S&P 500 but is actually on the TSX and purchased with CAD.

      Hope this helps with your decision.

  27. Joel

    Hi,

    Instead of using DLR.U.TO to DLR.TO to convert USD to CAD, I was thinking of using Telus.

    i.e. buying TIXT shares and then asking Questrade to journal them to TIXT.TO

    1. Hi Joel,

      This is a possibility, but unless you are bullish on Telus then it’s a riskier proposition when comparing to using DLR. If you’re journaling shares using a non-DLR interlisted stock, then you incur the additional risk of the underlying company stock dropping in price between the time you buy, journal, and sell shares of that stock.

  28. Sherman

    it is weird, last time questrde agent says the journal now can be real-time. don’t need to wait. He did journal it in a minute, and then I can sell it right away. but another time, another agent says it will take a couple of days. seems all agents do not keep the same pace.

    1. Fraser C.

      Interesting??? Were you past the settlement period on the purchases when they did the real time journal???

      My experience has always been waiting for settlement of the initial buy (2 days IIRC) then some additional delay (usually within a day) before they I actually see the journaled shares and I can sell.

    2. That’s interesting Sherman – I’ve never heard of that happening. I just completed Norbert’s Gambit a few times myself recently and I still had to wait several days for the process to complete. I wonder if anyone else has experienced this before?

  29. Sunny

    I have CAD$100K to investigate in the US stocks. I decided to buy TD. TO Then journaled it to TD.NYSE. Then sell the TD and got the USD and then buy my US stocks. Is anything wrong about this ? Why is everyone so interested in the EFT DLR when the cost of buying and selling in stocks is cheaper without the ECN fees. Thank you

    1. Hi Sunny,

      The reason there is a focus on journaling using the DLR ETF is because it tracks the currency conversion rate between USD and CAD, so the conversion can mimic the actual conversion rate as close as possible. If you’re journaling using a different interlisted stock, then you incur the additional risk of the underlying stock dropping in price between the time you buy, journal, and sell shares of that stock. The ECN fees that you would incur could be much less of a cost in that case.

      Hope this helps.

  30. FC

    I really wish we could do this instantly (at least same day), are there any brokerages where that is possible? If not with DLR/DLR.U then maybe with Canadian bank stocks? Buy TD on TSX, sell same day in NY or vice versa …

    I’ve used DLR/DLR.U to convert currency often and have definitely saved hundreds of dollars in invisible fees. However the last time I did was March 20th when USD was 1.46 CDN and very volatile. It took 5 days to complete (settle, journal, sell – weekend in middle) by which time the rate had dropped – would have been better for me to eat the Questrade fees in that case.

    On my last USD purchase I didn’t have USD available and wanted to buy immediately so I took the hit. Here is how that math worked out:

    Purchase Jan 5th 10:17am:
    * CDN $1973.11 (spent)
    * USD $1573.51 (received)

    In other words I paid 1.2875 CDN per USD.

    Looking at CAD=X chart on Yahoo Finance I see the following exchange rates at various times:
    * 10:15 1.2735
    * 16:00 1.2735
    * 17:00 1.2686

    At the time of my purchase and market close it turns out the exchange rate is the same. If I consider that my true exchange rate (which I think it should be) then Questrade charged me 1.1%. If I consider the 5PM rate then the fee was 1.49%.

    * for a Questwealth portfolio it’s documented as a 1% fee on currency conversions – https://questrade-support.secure.force.com/mylearning/view/h/Investing/Currency-exchange-fees-for-Questwealth-Portfolios/
    * for other accounts I’ve read fee is 1.5% but I don’t know if that’s accurate. The only thing I can find for sure on Questrade’s site is “Questrade’s market rate is determined at the end of each trading day, and applied to that day’s trading activity” – https://my.questrade.com/clients/en/my_accounts/currency_settlement.aspx

    I believe the default settlement currency for registered accounts is actually CDN, I’m 99% sure I had to actively change it after realizing all of my USD dividends and sales were converted back into CDN (default could have changed since I opened my accounts).

    Whatever the case I find it sleazy that Questrade pushes itself as low fee but at the same time buries these significant currency conversion fees (cannot find clear documentation – what “end of day rate” means exactly and what markup?).

    In the case of my last transaction I’d like to see in account activity log real detail (1573.51 USD converted from CDN at 1.2735, plus $21.46 CDN commission).

    1. Aaron Jones

      FC,

      “I really wish we could do this instantly (at least same day), are there any brokerages where that is possible?”

      Yes. RBC Direct Investing allows you to complete Norbert’s Gambit with DLR and DLR.U the same day and you don’t have to phone them to do it. You just select the DLR CAD units that you’ve bought and select that you want to sell them in USD. RBC does the journalling automatically behind the scenes.

      To do this it costs their trading fee of $9.95 (CAD) + $9.95 (USD). But there are no ECN fee and with that you can sell/buy immediately at the market price if you wish versus a limit order with bid/ask. Because DLR’s price fluctuates so slowly, I only do market orders with DLR.

      Norbert’s Gambit with Questrade is perfectly fine and affordable if you are okay waiting an hour on the phone and you have the patience to wait the 3 business days, during which of course the exchange rate and the price of DLR.U can change.

      I see some people in the comments here mentioning they want to do $100,000. If that’s the case, use RBCDI or another brokerage that offers same days ournalling and not Questrade.

      Because it’s not worth the risk of the currency fluctuating with that large amount of money, especially if a weekend is involved or the unknown risk if somehow your order incurs ECN fees due to some obscure exception that Questrade enforces. See one of the other comments here, about a limit order going through at the start of the trading day and as such it incurred ECN fee. While not the end of the world the ECN fee on 10,000 units would double the RBCDI fee and you’d have had to wait several days for it to finalize.

  31. Sophie

    Thank you for this complete guidance!
    I have two questions:
    1. After I “convert” cad to usd in this way, Will I be able to withdraw the usd fund to my usd account in td Canada? or do I have to convert back to cad and withdraw?

    2.Is there a math relationship between the price of “DLR.To” and usdcad rate on Yahoo (https://finance.yahoo.com/quote/CAD=X/)? Thank you.

  32. Jean

    Hi folks,

    Just wanted to relate my experience so far with Norbert’s Gambit, as described in this post.

    So yesterday (Tuesday Dec 15) I bought 2000 shares of DLR.TO. At around noon, I sent an email (using their email support form) requesting, “Please journal 2000 shares of DLR.TO to DLR.U.TO. My account number is xxxxxxxx.” I also provided my name. Within a few minutes I received an automated confirmation email from Questrade, along with a case number, saying essentially “we’ll get back to you asap”.

    Today (Wed Dec 16) just after noon, I received an email from Questrade Support saying that the journaling request had been placed, and that “The DLR.U.TO shares will be available earliest on Monday or Tuesday, next week.”. Easy-peasy!

    The reason I chose to email rather than chat, is that I used chat last week with them, and they were so busy that I was #79 in the queue, and had to wait about 30 minutes to get an agent.

    So, bottom line, an email request works just fine (as I’m sure the chat would too).

    Now I wait until next week to proceed to the next step of this Gambit!

    Thanks for the great post, Jason!

    Jean.

    1. You’re absolutely right that live chat can take a while if they’re busy. That’s a great reason to use email instead! Good advice Jean and hope the rest of your NG goes well.

    2. Michael

      I just finished the first part of journaling over via Live Chat and they also recommended email. I’ll probably stick to that in the future. Thanks for the post Jason.

  33. Stuart

    Hello, Thanks for the great article and tips. A question I have is I am wanting to exchange USD to CDN. With the market so crazy right now would buying a stock like royal bank of canada on the us stock exchange and then journaling it to the TSX via questrade be a faster method instead of the DLR.U.To to DLR.TO method?
    I just dont want to wait any longer to get the exchange rate secured using questrade and I have a large amount to covert.
    Thanks so much for your help!

    1. Hi Stuart,

      Buying on the US stock exchange requires that you have USD in your Questrade account. If you don’t, Questrade will automatically convert for you, but will do so at their standard exchange fees, which are typically quite higher than if you do Norbert’s Gambit. But if speed is of the essence and you need to convert right away, you can just let Questrade do the conversion. Journaling a different interlisted stock will not speed up the process.

  34. thomas

    Hi! Maybe I haven’t read thoroughly enough but I did try going through the article and the comments without success! So my question is simple :

    Using this technic with the DLR.TO EFT and my Margin Questrade account, after the DLR.U.TO EFT being sold and cash back in USD – can I buy not EFT but some USD STOCKS trade on the Nasdaq ?

    Thanks fro your great community support and patience,
    Thomas, Vancouver

    1. Hi Thomas,

      Once you have successfully completed Norbert’s Gambit and converted CAD to USD in Questrade, you will be able to buy stocks listed on the Nasdaq with USD.

  35. Victor

    Hey Jason,

    Amazing article. Couldn’t be better!!

    I am still a bit confused about currency risk. While I understand the concept, could you use an actual example on how currency risk works in this case. Or maybe another article -:)

    Thanks again.

    1. Lynn

      I initially thought this was the best explanation article on NG, and regarding currency risk, the other basically said it’s not there since the value is locked down.

      That turned out to be incorrect (or I misunderstood), because with a $.10 decrease while waiting for the journaling, I’ve lost almost $300 on $20,000. I’ll attempt a limit sell to see if the currency does better in a few days.

      The author should really provide more insight on this very real risk.

      1. Hi Lynn,

        The incurred currency risk depends on whether you’re converting from CAD to USD, or USD to CAD.

        Here’s an example, and I’m going to ignore the trading fees to keep it simple here. For example, let’s say that you bought 100 shares of DLR.TO, trading at $13.00 per share. You will still have 100 shares when you journal them to DLR.U.TO. The price of DLR.U.TO is inelastic and does not fluctuate unpredictably. Let’s say you sell 100 shares of DLR.U.TO at $10.00 a week later. This means you’ve converted $1300 CAD to $1000 USD, a 1.30 USD to CAD rate that was locked in when you bought DLR.TO in the beginning.

        Now suppose that you want to convert $1000 USD back to CAD. Say DLR.U.TO is trading at $10.00/share. You would first buy 100 shares DLR.U.TO. However, at this point you have not locked in the final conversion rate and are still susceptible to currency risk. This is because while you are waiting for your shares to journal to DLR.TO, the price of DLR.TO will still move in line with the current exchange rate during trading hours. Therefore, you lock in your rate when you finally sell DLR.TO. The DLR.TO stock price could have decreased to $12.90 for example during that time, which means your USD to CAD exchange rate would be 1.29 at the time of sale.

        Lynn, I believe you are converting USD to CAD in your example, which means that you would be incurring exchange risk until you sell DLR.TO. If you have not sold DLR.TO yet, you are still effectively holding USD because DLR is a U.S. cash equivalent.

        I hope this clears things up! If you have any further questions, let me know.

        1. PJ

          It sounds more like Lynn is waiting for her CAD ->USD shares to journal over, and the interface is telling her the price of DLR.TO in the meantime.

          1. When you buy DLR.TO or DLR.U.TO, you are holding a US cash equivalent. The CAD to USD rate is locked in at the moment of purchase. Since the actual conversion rate is now known, there are no surprises as to how much USD you will be receiving.

            However, this does NOT mean that the CAD value of your USD won’t still change. Of course, whenever you are holding USD as a Canadian, you will always be subject to fluctuations in the foreign exchange rate, so in that sense holding USD will always come with that type of risk.

  36. Troy

    An excellent guide on avoiding Questrade (and other brokerages’) exorbitant fx fees!

    I did hit a snag though and am wondering if you, or others, have encountered it and are aware of a workaround.

    I followed your guide to a tee with all trades being limit orders (buy @ bid/sell @ ask) and no odd lots to avoid ECN fees. None of the trades were executed immediately, but, inevitably, I was charged ECN fees (and the sale of DLR.U.TO took over two weeks to fill).

    Upon inquiry with Questrade, I was informed that the fees were due to the trades being executed at market open and was directed to this link – https://questrade-support.secure.force.com/mylearning/view/h/Investing/ECN+fee+guide.

    If you expand “important to know”, you’ll find this list:

    What else can be considered to be removing liquidity?

    Buy and cover orders where the limit price is equal to or greater than the ask price
    Sell and short orders where the limit price is equal to or less than the bid price
    Executed stop orders
    Executed stop-limit orders where the limit order is immediately executable
    Any order with special restrictions, such as AON (all or none)
    Any order executed in the pre- or after-market
    Odd lot orders can trigger an ECN fee, regardless of the order type and/or order duration used
    Trades executed at market open or market close

    That last one is what got me. If the USD.CAD rate is relatively static, you can have days on end when the price of DLR.TO and DLR.U.TO doesn’t fluctuate much during the trading session so you don’t get filled. If the rate moves overnight, your order is filled at open and you have to pay ECN fees (or so this is what I was told).

    Is this a new thing? Have others experienced this? If it’s common, and especially if you are exchanging a lot of money, then I think a lim order for the day, which you repeat day after day, until filled, may be the optimal approach.

    Alternatively, is there an ETF similar to DLR that has higher volume? Or is denominated in greater multiples? Both should increase the likelihood of an intra-day fill on day of lim order.

    Thanks

    1. HI Troy,

      You make a great point. Trying to avoid ECN fees with buying/selling DLR.U.TO is tricky.

      I experienced this issue firsthand myself when I tried to buy DLR.U.TO at the bid price when converting from USD to CAD. The trade took 13 days to execute. What’s worse, I ended up incurring ECN fees and I learned after the fact that if a trade is executed as soon as the market opens at 9:30, it is considered removing liquidity and thus you’re charged ECN fees anyway.

      You could do a limit order each day and repeat until filled, but that would probably be quite the hassle. That’s why I recommend in the article to just buy or sell DLR.U.TO instantly and take the ECN fees, as it’s usually just not worth it.

  37. Anonymous

    I was on live chat with Questrade. They also suggested the following:

    Also, for your convenience, you can email us at support@questrade.com and request to journal your shares, and it will be done within the same time frame! Simply email us the account number, ticker symbol, and the number of shares, and we’ll ensure to have that request processed for you in the same time frame!

    I will be trying this next time

    1. You’re absolutely correct! You can either call, open a live chat, or email Questrade support to journal the shares. They all essentially accomplish the same thing, and it’s purely up to preference which way you choose to let them know.

  38. KS

    As a current BMO Investorline customer who is exploring options (including Questrade), I have a few questions for either the author or anyone else who may know:

    I have been using Norbert’s Gambit with BMO IL for a while now, but have not been using DLR / DLR.U… I typically pick a Cdn bank stock (as they are interlisted and they don’t fluctuate wildly in price… ) The big difference is that on BMO IL, I can buy the stock in the currency I have the cash in, but as soon as the trade executes, I can immediately sell on the opposite exchange and have my $$ converted within minutes. I think I have read that RBC Direct Investing also allows this… Are there any other Cdn brokers that allow this? It seems like a big difference! (As a caveat here: I have in the past incurred interest charges for the artificial negative balance, but a phone call usually gets this reversed / cancelled) For clarification: I do not have to call in to do any journal-over. Only need to call if I see any interest charges (which hasn’t happened the past few times I have done it).

    Thanks in advance

  39. Melody

    Sorry if this is a dumb question, but how do I use the US currency after everything is done? I need to pay US dollar invoices, not convert it back to CAD later. Can I just transfer the sum to a US dollar bank account? Baby steps hahaha.

    1. Jonny Delta

      I have the exact same question except the opposite way-around. I’m in the US and would like to move some of my funds into Canadian accounts using norbert’s gambit. Once I buy in USD (from the US), journal to CAD, and sell in CAD, can I get those CAD amounts deposited into a Canadian account? If not, then it seems I’m stuck on the US side of the border with CAD, and I don’t know what you’re supposed to do with that…

    2. Sanrosh

      I have same Question. How do you get your US dollars out of questrade account to pay your bills? Does Questrade support tarfser to Bank of America Account?

  40. Bobbyboy

    Hello and thanks for the most detailed guide with excellent info graphics!

    I’m attempting to use the Gambit to convert $100kCAD to USD from my corporate Margin account. Just as I was about to hit buy, a warning came up that Questrade will loan never the money in effect and the fees associated for the DLR.to trade were around $27CAD.

    Are these fees the ECN’s and hence unavoidable and would Questrade charge interest on the money loaned/why are they loaning it if I have the CAD ready to buy?

    Thanks!

    1. Hi Bobby,

      The notice that pops up as you hit buy is always a conservative estimate, and not necessarily reflective of the actual ECN fees you will pay.

      When you buy DLR.TO, you can attempt to avoid that fee by placing a buy limit order at the bid price. If it goes through, you will pay $0 or next to $0 in commissions for this trade, depending on whether you bought in multiples of 100 shares. The risk here is that your order never goes through.

      Also, if you have enough CAD to buy all the shares, you shouldn’t be charged interest or be loaning money.

  41. Phil Damecour

    One small comment, if you are looking for your cash at the end of the day you will need to wait an addition 2-3 days when you sell DLR and wait for it to settle, depending on how you plan to withdraw the funds. So a total of 7-8 business days. Very long…

    1. Hi Phil,

      I don’t believe you need to wait the T+2 days for the trade to settle before you can withdraw the funds out of your account. Once you sell DLR, the cash from the sale should instantly be seen in the account balance. As long as you have the cash balance to make a withdrawal, you can issue a withdrawal request right away.

      While it’s true that it will likely take 1-3 business days for the electronic fund transfer to process and for you to receive the cash in a banking account, that wait time is not related to the actual NG process.

  42. Kevin Smyth

    Hi There,

    Thanks for the article. It’s very clearly explained and there are details I haven’t seen anywhere else.

    I have a question. I’m a Canadian wanting to buy some bitcoin and intend to use the QBTC.U ETF.

    That’s on the TSX but is in US dollars. Should I be using Norbert’s Gambit for this?

    Kevin

    1. Hi Kevin,

      Yes, ideally you should first use Norbert’s Gambit to convert CAD to USD. This is because QBTC.U.TO is denominated in US dollars, so when you place a trade on Questrade for this ETF you will need to buy with USD if you don’t want to incur standard conversion fees.

  43. Jack

    Hello,

    I have been using this guide for the last month. It has been amazing!

    One issue that came up recently.

    When I am trying to sell the DLR.U.TO,, it gets queued, accepted, but does not sell by the end of the day. I have been doing this for the past 4 days now. I have been selling with the ‘ask’ price’.

    Any assistance would be great.

    1. Hi Jack,

      I came across a similar problem before when I was trying to buy DLR.U.TO at the bid price. This is due to the low trading volume of DLR.U.TO and the fact that price fluctuations of this stock are very small.

      If you really, really want to try saving on ECN fees, you would have to keep placing day orders at the ask price until it gets executed. For me, it took 13 days for example.

      In my opinion, it’s not worth the hassle to save on ECN fees because you might have to wait many many days for the trade to finally execute (which is also an opportunity cost if you’re looking to buy US equities afterwards).

      Hope this answer clarifies your issue!

  44. Hassan

    Hi Jason,

    I want to use Norbert’s Gambit in my TFSA account and have a question on its impact on the TFSA contribution. Say my contribution limit is 1, 000$, and I want to convert 1, 000$ from CAN to USD. The first step would be to fund my TFSA account with the CAD 1, 000$; then buy 1, 000$ worth of DLR.TO; journal them over to DLR.U.TO; then sell the DLR.U.TO shares to receive the money in USD;

    My question is, after completing the above, would I have crossed my 1, 000$ contribution limit?
    Asking since my TFSA account will see two transactions funding the account:

    1-My original 1, 000$ CAD (coming from my bank account to the TFSA account)
    2-The USD cash deposited in my TFSA account from selling my DLR.U.TO shares

    Not sure if, in terms of contribution room, what matters is step 1 only above; and whatever happens afterwards within the TFSA account does not affect the contribution room.

    Thanks,
    Hassan

    1. Hi Hassan,

      To answer your question simply, only step 1 above matters – that is, only your deposits into the TFSA account decrease the contribution room you have remaining.

      Anything that occurs inside your TFSA account, such as capital gains from selling shares, doing Norbert’s Gambit, etc. will not affect your remaining contribution room. Only when actually deposit or withdraw money from the TFSA will your contribution room be affected (it will increase or decrease by the corresponding amount).

  45. Wade

    Great article Jason. I wonder if you can incorporate the optimal currency exchange timing. As you mentioned in the article it sounds like when you buy the DLR.TO doesn’t really matter because you’re locking in to USD right away at the buy of DLR.TO. The exchange gain or loss will only happen then when converting back from DLR.U.TO back to DLR.TO and selling to get CAD cash correct? But theoretically if we are just talking about converting to CAD cash to USD cash and then USD cash and back to CAD cash, we would want to buy the US cash (using DLR.TO converted to DLR.U.TO) when the Canadian dollar is strong and sell the USD cash back to CAD cash ( DLR.U.TO to DLR.TO) when the Canadian dollar has weakened to the USD, correct? Just making sure my math is still right as it applies to buying and selling these ETFs.

    1. Hi Wade,

      That’s correct. When you convert from DLR.TO to DLR.U.TO, you already know the exchange rate because you have essentially locked it in the moment your buy order is executed. When you convert back from DLR.U.TO to DLR.TO, the conversion rate is determined when you sell DLR.TO to receive CAD at the end, and since you need to keep your shares for 3-4 business days for journaling, there can be currency fluctuations during that period of time.

      The fundamental logic you described for converting between currencies does apply for DLR, and your math is correct there.

  46. Felix

    Hello,

    I’ve read that when journalling from DLR to DLR.U, that it should be possible to do this immediately by calling in / chatting – at least for TD and not sure about Questrade.

    Is this a possibility in a Margin account as oppose to an account like RRSP / TFSA?

    Thanks

    1. Hi Felix,

      That’s right, you can immediately call or live chat with a Questrade representative once the buy order for DLR has been executed. This is the case regardless if you use a margin, RRSP, or TFSA account.

      Keep in mind that you will still need to wait the 2 business days for the trade to settle and another 1-2 days for Questrade to journal the shares before you can sell them and complete the process.

  47. christiano

    Hi! first Thank you for this “how to”…

    Sorry for my novice question, but under the Step 4 “Journal your DLR.TO shares to DLR.U.TO shares”, step 4, you said (in the chat with questrade) “please journal my ### DLR.to…”, and replace ### by a number… what is the number? The number of DLR.TO I just bought? A transaction number? I’m a little bit lost with this step.

    Thanks in advance!

  48. Fahid

    Hi there, just wanted to thank you for this and the infographic, you couldn’t have made it more idiot proof. thanks 🙂

  49. daemon jung

    Man your guide could not have been more useful right now! Super grateful for the spreadsheet and the in depth guide on such a useful technique. I’m gonna try this tomorrow, thank you so much!

  50. Alex

    Awesome article! One note though. If this statement is correct:

    “[ECN fees] are usually charged when you place a market order, a limit order at the ask price when purchasing shares, or a limit order at the buy price when selling shares”,

    the focus being on “a limit order at the ask price when purchasing shares”, then I don’t believe the following is true:

    “The main difference is that if you want to avoid ECN fees (but wait longer), you need to sell at the ask price or higher to add liquidity”.

    In other words, to avoid ECN fees you need to sell strictly _above_ the ask price, is that right?

    1. Hey Alex,

      Incurring ECN fees during buying and selling should be considered separately. The conditions are essentially reversed from one to the other.

      To avoid ECN fees when you’re buying your shares, you will need to place a limit order at the bid price or lower.

      On the other hand, when you’re selling your shares you’ll need to place a limit order at the ask price or higher to avoid the fees. These are the cases where your order isn’t executed immediately.

      Maybe it’s a confusing comparison because the first quoted paragraph is discussing when ECN fees are charged, while the second paragraph is discussing when ECN fees are not charged. It can be a head spinner, but I hope this clarifies things for you.

  51. Hussaini

    Thanks for the detailed article, it describe the process very clearly. Hwoever, I’m a bit confused on the following points when you say that should be avoided in TFSA account.

    Cold you please elaborate the following points a bit (especially the 2nd one that suggest to avoid in TFSA)?

    When to use Norbert’s Gambit: You’re buying US-listed ETFs in an RRSP account – if you have an RRSP account, you will be able to avoid US withholding taxes.

    When to avoid Norbert’s Gambit: You’re buying US-listed ETFs in a TFSA or non-registered account – it may be more cost-effective to invest in their non-hedged ETF counterparts on the TSX.

    1. Hi Hussaini,

      There is absolutely nothing wrong with doing Norbert’s Gambit in a TFSA. In fact, that’s what I do all the time. What I mean here pertains only if you’re looking to invest in a US-listed ETF that has a Canadian equivalent.

      Here’s an example – let’s say you wanted to invest into an ETF tracking the broad US market. You could either invest in VTI, which trades in US dollars, or VUN, which trades in CAD and is not currency hedged. If you’re making this decision within an RRSP, you would want to execute Norbert’s Gambit to buy VTI, but with a TFSA you’d likely be better off buying VUN directly.

      The specific reasons for doing this are beyond the scope of Norbert’s Gambit, but check out the following detailed explanation about using US-listed ETFs by Canadian Couch Potato if you’re interested in learning more: https://canadiancouchpotato.com/2013/12/09/ask-the-spud-when-should-i-use-us-listed-etfs/

  52. G

    Hey,

    Thanks for the article, and great guide by the way! Upon purchasing the DRL shares, are we only waiting for questrade to journal them over? Once i see DRL.U.TO would i be able to sell right away? Technically, the only waiting period is the 2 business days for the journal correct? Do you find it better to do it in the morning to reduce the lead-time?

    Thanks!

    1. Once you’ve bought and journaled DLR shares, you will need to wait 2 business days for the trade to settle, and an additional 1-2 days for Questrade to journal the shares. This is a total wait of 3-4 business days from the date you bought the shares. When the journal is completed, you will see your journaled shares appear in the Positions tab of the trading interface, at which point you’ll be able to sell the shares.

      Personally, I haven’t gone out of my way to time the trades during a particular time of day. If you notice an interesting pattern, let us know!

  53. Kuba

    This article could not be more thorough. Norbert’s Gambit went from being “not worth spending the time to learn” to “I can’t believe I thought it was ‘not worth spending the time to learn'”.

    Thank you!

  54. Victor

    Hello thanks for this great article – so helpful!

    A question I have is that if I intend to avoid the ECN fees, the trade may take some time to execute, do I need to wait until the trade executes before I can do the journaling step? Technically, if the trade has not executed yet, then I don’t have the ETF shares yet for journaling.. this is what I’m not clear about.

    Thanks!

    1. Hi Victor,

      It depends if you are referring to the transaction date (the date you buy DLR) or the settlement date (2 business days after you buy the shares).

      If you’ve placed a limit order to buy DLR but the trade hasn’t actually executed yet, you don’t own the shares yet so you wouldn’t be able to journal them. In other words, if you don’t see DLR in the Executions tab of the Questrade trading interface, you can’t do any journaling.

      However, once you buy DLR you can immediately request to journal the shares. You do not have to wait the 2 business days for the trade to settle first.

      Hope this clears things up!

      1. Anonymous

        Thanks, Jason for clearing that up! I have USD that I would like to convert to CAD. To avoid the ECN fees I will place a limit order to buy DLR.U.TO at the bid price. Then I need to keep an eye on it until my trade order actually executes before I can request to journal my DLR.U.TO shares to DLR.TO. Then I need to wait until the DLR.TO shares appear in my account ready for me to sell.

        I think in the best case scenario it would take 1 week to reach this point (having DLR.TO shares in my account available for me to sell). Then I’ll have to wait some time more because I also want to avoid the ECN fees when selling so I would need to place a limit order at the asking price.

        Overall, factoring my impression of Questrade’s slow operating speed, I’m predicting my minimum wait time to be in the 8 – 10 business days range (assuming I decide to sell DLR.TO immediately as soon as it is available for me to do so and not waiting further for a favorable time window). Therefore, at a minimum, my risk is the possible difference in USD/CAD conversion rates that are 8 – 10 days apart (conversion rate buying DLR.U.TO versus conversion rate selling DLR.TO).

        Interesting and fun proposition! There is a small element of gambling/luck to this! 🙂 I think it is still relatively safe though, as long as the Norbert’s Gambit (USD to CAD version) is executed during relatively stable political/economic times (when currency rates are not fluctuating by a lot).

        Thanks so much for all your help, Jason! Happy Holidays to you and cheers!

  55. Stanley

    This is a brilliantly written article, thanks so much Jason for the wonderful content. You’ve done a great job in helping many Canadians save money!

  56. Dan

    DLR has a 0.45% management fee (plus tax) so while the CAD/USD rate is locked in there is some immaterial erosion on a daily basis throughout the holding period. Not sure if you wanted to factor that into your analysis alongside the ECN fee.

    1. Hi Dan,

      Thanks for pointing this out – I like your attention to detail and the need for absolute precision.

      You’re right that there is a management fee on DLR that will cause the journaled conversion rate to be marginally higher than the actual exchange rate (before commission/ECN fees). However, this should already be factored into the price of DLR, which is what the calculator uses as an estimate. Regardless, the holding risk associated with currency rate fluctuations over time would have a much greater impact than the management fee on your final conversion rate.

      To be clear, while the spreadsheet can calculate the exact commission and ECN fees that you can expect to pay on Questrade, it makes no predictions on the selling price of DLR at the time of sale and uses only the current price as an estimate. That’s why the total amount converted is labelled as an estimate only.

  57. Sam

    I am considering doing Norberts gambit only to purchase ITOT (US total market ETF on NYSX) instead of XUU (US total market ETF on TSX, unhedged) only in my RRSP to avoid the 15% foreign witholding taxes and slightly lower MER.

    My question is the following;
    1) Does Questrade allow journaling of DLR shares in RRSP accounts? I noticed your print screens are for a TFSA account and have read in other finance articles sometimes brokerages do not allow journaling of DLR in RRSP accounts.

    2) In my specific situation, if I would be buying XUU (unhedged) on June 4th for example, I would already be exposing myself to FX variations as of June 4th up until I sell it whatever date in the future. The question is then, buy performing Norberts gambit instead starting on June 4th (when I would first purchase DLR.TO) my foregin currency exposure would be the same since I would have the same exposure under XUU. Am I missing something or in my case, the fx exposure of buying XUU on June 4th is the same as buying DLR.TO? The risk that is different is that I will either gain or lose depending on the variation in the market (excluding FX variations) between June 4th and when I finally purchase ITOT a few days later. Do you agree?

    1. Hey Sam,

      That would be an ideal use of Norbert’s Gambit since the lower MER and withholding tax savings from purchasing ITOT (denominated in USD) instead of XUU (CAD denominated) should outweigh the conversion costs of doing Norbert’s Gambit in the long run.

      To answer your first question, Questrade permits the journaling of DLR shares in an RRSP, TFSA, or margin account, so you’ll be able to do Norbert’s Gambit in an RRSP.

      Regarding your second question, I agree that buying DLR.TO would give you equivalent FX exposure to buying XUU, since in both cases you are buying an equity whose price is directly affected by the USD to CAD conversion rate. If you were to purchase DLR.TO first and then buy ITOT, then yes, the difference in exposure between this and buying only XUU at the start would be the change in price of the underlying index being tracked (S&P Total Market Index). Also be sure to factor in differences in holding costs, such as the extra trading fee of selling DLR.TO, when calculating your precise figures.

  58. David

    Does this work with a margin account as well or only registered accounts? because the currency settlement setting is only available for registered accounts

    1. Hey David,

      Great question. Norbert’s Gambit does in fact work for Questrade margin (non-registered) accounts. This is because with margin accounts, trades are always settled in the currency of the transaction, so you can simply skip this step of the process if you’re using a margin account.

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