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Just completed Norbert Gambit with Questrade

  • Last Updated:
  • Jun 16th, 2017 6:00 pm
[OP]
Deal Addict
Feb 21, 2004
1155 posts
70 upvotes
Montreal

Just completed Norbert Gambit with Questrade

I just completed Norbert's Gambit to convert USD to CAD. Here's the experience I just had with Questrade this past week:

Timeline:

1) Bought DLR.U.TO on March 8th - Cost cost: 26 394.30$ USD
2) Immediately requested a journal to DLR.TO
3) Shares FINALLY show up on March 15th (5 business days)
4) Sold DLR.TO on March 17th (got busy on the 15th and 16th)- Net deposit in account: 35 159.26$ CAD

According to XE.com at 10AM eastern this morning, 26 394.30$ USD should have yielded 35 209.10$ CAD.

Is my math correct in assuming that my FX conversion cost 35 209.10$ - 35 159.26$ = 49.84$ or 0.14%?
If that is correct, this is awesome as Questrade would have charged me a standard 2% currency fee or 528$ USD / 703$ CAD extra to do this the traditional way?



My only complaint from @Questrade is the long settlement/journal time when other brokers allow instant transactions
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18 replies
Deal Addict
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Nov 18, 2007
3353 posts
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Valleywood
If the trade was immediate on the 8th, then the Bank of Canada Noon Rate was 1.3481. (The exchange is going to swing quite a bit over 9 days that you have/had to wait.)

That translates to $35582.

With NG and the spread on DLR, I typically lose about 1/2 point. So $35450 would be fair. (Not accounting for trading fees.) The way I look at it, if this was my trade, the cost was $132 (the difference between noon rate and NG proceeds) and easily beats any bank teller exchange.

P.S. The XE quote is always high. Once you start an actual transaction, then the rate is less favourable. Been there. Won't go there anymore - unless I need Euros.
Deal Addict
Nov 24, 2013
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If you bought DLR.U on the 8th, immediately requested it to journal over, then your effective FX could be gauged by the ratio between DLR.U units you bought, and DLR units you sold, no? FX rate on the 17th would have nothing to do with it. On the 17th you sold units that were already in CAD since whatever day the journaling over happened.
Sr. Member
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Jun 27, 2007
539 posts
96 upvotes
Toronto
HoTiCE_ wrote:
Mar 17th, 2017 11:15 am
I just completed Norbert's Gambit to convert USD to CAD. Here's the experience I just had with Questrade this past week:

Timeline:

1) Bought DLR.U.TO on March 8th - Cost cost: 26 394.30$ USD
2) Immediately requested a journal to DLR.TO
3) Shares FINALLY show up on March 15th (5 business days)
4) Sold DLR.TO on March 17th (got busy on the 15th and 16th)- Net deposit in account: 35 159.26$ CAD

According to XE.com at 10AM eastern this morning, 26 394.30$ USD should have yielded 35 209.10$ CAD.

Is my math correct in assuming that my FX conversion cost 35 209.10$ - 35 159.26$ = 49.84$ or 0.14%?
If that is correct, this is awesome as Questrade would have charged me a standard 2% currency fee or 528$ USD / 703$ CAD extra to do this the traditional way?



My only complaint from @Questrade is the long settlement/journal time when other brokers allow instant transactions
Thank you for your feedback, HoTiCE_!
Jr. Member
Feb 3, 2013
111 posts
42 upvotes
GREENWOOD
When doing DLR/DLR.U you get the CAD/USD fx at the time of buying or selling DLR. DLR.U is always 9.94 to 9.95.

When Converting CAD to USD your exchange rate is fixed at the time you buy DLR. It doesn't make a difference how long you hold before you sell DLR.U.

When converting USD to CAD with DLR.U/DLR if the Canadian dollar goes down while you wait for the units of the ETF to journal then you get a bonus, if it goes up you get fewer Canadian dollars.

If you convert a large amount of USD to CAD the best brokerage is RBC DI as you do not have to wait for a journal to settle before you sell the interested stock/fund.
Last edited by sixcolors on Mar 17th, 2017 5:44 pm, edited 1 time in total.
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Oct 9, 2005
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Toronto
sixcolors wrote:
Mar 17th, 2017 5:44 pm
DLR.U is always 9.94 to 9.95.
Not strictly true: my Gambit in Sep 2015 was with DLR.U @ 9.97 (got lucky with my sell order fulfilled at that price vs. the 9.96 it was mostly at). Horizons performs a unit consolidation every now and again to bring DLR.U back to 10.00. The key message about the FX rate you get doing a Gambit is still valid though.
Intricated
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Dec 28, 2009
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Intricated wrote:
Mar 17th, 2017 6:18 pm
Not strictly true: my Gambit in Sep 2015 was with DLR.U @ 9.97 (got lucky with my sell order fulfilled at that price vs. the 9.96 it was mostly at). Horizons performs a unit consolidation every now and again to bring DLR.U back to 10.00. The key message about the FX rate you get doing a Gambit is still valid though.
Just one more thing to add to your explanation, the reason it decreases over time (9.97, 9.96, 9.95, 9.94...) is because the ETF management fee (MER) is taken out of the pool of assets. It is currently at 9.94 - 9.95 (my recent trades got filled at 9.945) and has been for a while, but this will keep decreasing to 9.93, 9.92, etc until they do a reverse split/consolidation with an odd ratio like 1 new for 1.03275947 old units to "reset" It to $10.
Newbie
Dec 11, 2003
57 posts
Richmond Hill
HoTiCE_ wrote:
Mar 17th, 2017 11:15 am
I just completed Norbert's Gambit to convert USD to CAD. Here's the experience I just had with Questrade this past week:

Timeline:

1) Bought DLR.U.TO on March 8th - Cost cost: 26 394.30$ USD
2) Immediately requested a journal to DLR.TO
3) Shares FINALLY show up on March 15th (5 business days)
4) Sold DLR.TO on March 17th (got busy on the 15th and 16th)- Net deposit in account: 35 159.26$ CAD

According to XE.com at 10AM eastern this morning, 26 394.30$ USD should have yielded 35 209.10$ CAD.

Is my math correct in assuming that my FX conversion cost 35 209.10$ - 35 159.26$ = 49.84$ or 0.14%?
If that is correct, this is awesome as Questrade would have charged me a standard 2% currency fee or 528$ USD / 703$ CAD extra to do this the traditional way?



My only complaint from @Questrade is the long settlement/journal time when other brokers allow instant transactions
Did you get charged for the ECN fee? Last time I did this with Questrade, I was charged with this fee and the saving I got is very minimal at the end.
-- J
[OP]
Deal Addict
Feb 21, 2004
1155 posts
70 upvotes
Montreal
redpiglet wrote:
Mar 18th, 2017 5:22 am
Did you get charged for the ECN fee? Last time I did this with Questrade, I was charged with this fee and the saving I got is very minimal at the end.
Yes. Unfortunately, when trading DLR.U.TO, the price doesn't move so I couldn't buy below the ASK price to avoid removing liquidity.
When selling DLR.TO, I also wasn't able to sell above the BID as it kept going down. Still saved a couple of hundreds easy though compared to the "standard" method where they charge an extra whopping 2% commission
Got Heat?
[OP]
Deal Addict
Feb 21, 2004
1155 posts
70 upvotes
Montreal
sixcolors wrote:
Mar 17th, 2017 5:44 pm
When doing DLR/DLR.U you get the CAD/USD fx at the time of buying of selling DLR. DLR.U is always 9.94 to 9.95.

When Converting CAD to USD your exchange rate is fixed at the time you buy DLR. It doesn't make a difference how long you hold before you sell DLR.U.

When converting USD to CAD with DLR.U/DLR if the Canadian dollar goes down while you wait for the units of the ETF to journal then you get a bonus, if it goes up you get fewer Canadian dollars.

If you convert a large amount of USD to CAD the best brokerage is RBC DI as you do not have to wait for a journal to settle before you sell the interested stock/fund.
Excellent info, I did NOT know this before hand. I was wondering why DLR.U didn't budge at all after 2 days of market limit orders. It appears it is riskier when doing USD to CAD instead of the other way around. In my case, Questrade took forever to journal and when it did happen, it was the 22nd, the day the Fed announced the hike sending the CDN dollar up vs USD. Lost a bit there but nothing overly dramatic. Still came out ahead.
Got Heat?
Newbie
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Jan 6, 2017
3 posts
What about using the Forex option with Questrade? After all, foreign exchange is what we are after; does Norberts Gambit save compared to buying forex with the online platform?
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Apr 16, 2006
5833 posts
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ConMachine wrote:
Jun 15th, 2017 3:24 am
What about using the Forex option with Questrade? After all, foreign exchange is what we are after; does Norberts Gambit save compared to buying forex with the online platform?
Yes, significantly.
Newbie
User avatar
Jan 6, 2017
3 posts
thanks! did a $350k conversion USD to CAD with a phone quote on exchange from them. Rate was better than my other options at the time, so not much lost, I hope... That was last time, next time try the gambit.
Newbie
Dec 21, 2010
43 posts
6 upvotes
HoTiCE_ wrote:
Mar 17th, 2017 11:15 am

2) Immediately requested a journal to DLR.TO
Do you know how do I request journaling with Questrade? I could not find any menu for it after logging in. Do I need to call in??

thanks.
Deal Addict
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Oct 9, 2005
1007 posts
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Toronto
khkchan wrote:
Jun 16th, 2017 10:51 am
Do you know how do I request journaling with Questrade? I could not find any menu for it after logging in. Do I need to call in??

thanks.
An e-mail with the journal request is more than sufficient.
Intricated

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