How to perform Norbert’s Gambit on Questrade

Pile of foreign currency

What is Norbert’s gambit?

If you convert between currencies with your online bank or brokerage, you’re almost certainly being ripped off by fees hidden in the exchange rate. For example, if the going rate for USD is $1.28 CAD, your brokerage will quote you something closer to $1.30 CAD and pocket the difference.

This isn’t a big deal if you’re buying something for $10 USD on Amazon, but these fees are painful if you’re converting thousands of dollars for vacation or to invest in American stocks. Thankfully, there’s a way to avoid these fees using a technique called Norbert’s gambit.

The general premise of Norbert’s Gambit is this: if a stock is listed on both a Canadian and an American stock exchange, you can buy that stock in CAD and sell it in USD.  If the market is acting efficiently, the ratio of the price on the American exchange to the price on the Canadian exchange will be exactly equal to the current USD/CAD exchange rate.

The obvious problem here is that the price of the stock could change during the time it takes for you to buy and sell it in different currencies.

Thankfully, there’s a solution in the form of a wonderful ETF under the ticker DLR.TO.  This ETF is denominated in CAD and tracks the USD/CAD exchange rate, so owning it is putting you at no more risk than if you had just purchased USD in the first place.  You are effectively locking in an exchange rate the moment you buy it.  Your new ETF can then be sold for USD by following these steps.

Norbert’s gambit on Questrade

Enter an order for DLR.TO in the trade window.  I recommend being patient and following the bid price, if you cross the spread you’re going to lose the benefits of this technique.  (Note that the spread is usually $0.01, I took this screenshot after the close.)

To calculate how many shares you need to buy, divide the amount of money you’re trying to convert by the share price of the ETF. For example, if you want to convert $10,000 CAD to USD and the share price is $12.50, you’ll need to buy 800 shares.


Next, head to chat support.

 go to chat with customer service

Select these options on the popup screen.


Once you have a customer service rep chatting with you, request that they journal DLR.TO to DLR.U.TO – they’ll understand what you mean.

After a few days, DLR.TO will be exchanged for DLR.U.TO, free of charge.  Now you can sell those shares for USD. Again, I recommend being patient and following the ask price.

 sell dlr.u

Once your order is filled you’re done! You now have American dollars in your account.

The only expenses you’ll incur are trading fees, and because DLR.TO is an ETF, Questrade won’t even charge you for buying it. Expect to pay less than $15, which is amazing compared to the standard 2% conversion fee.

23 thoughts on “How to perform Norbert’s Gambit on Questrade”

  1. Can you explain the bid/ask part? I have used this technique a couple of times but when buying or selling I think I just did a Market Order, thanks!

    1. The ask price is what people are willing to sell a share for, and the bid price is what people are willing to buy a share for. For example, the asking price may be $10.05 and the bid price may be $10.00. The difference between what people are willing to sell for and what they’re willing to buy for is the “spread” – in this case it’s $0.05. There won’t be a transaction until someone is willing to up their bid, or someone is willing to lower their ask.

      If you use a market order you are skipping this process and immediately paying the ask price (if you’re buying), or getting the bid price (if you’re selling). This is usually fine, but with DLR I’ve noticed the spread reaching up to $0.03. If you use a market order buying and selling DLR, you might be overpaying as much as $0.03/share each time (about 0.3%), which can be a lot if you’re converting a lot of cash.

      It’s a small optimization, but it may be worth using a limit order and trying to get your shares for cheaper than the asking price.

  2. I’m doing this right now and there is a 14.95 charge from quest trade, so clearly it’s not free.

    1. I’m not sure where you’re incurring this charge. Journaling is free, but there is a transaction fee for selling ($5) and you might incur ECN fees as well (up to $0.0035/share). The savings on the exchange rate will easily make up for this if you’re converting more than a few hundred dollars at once.

  3. I am looking for an Canadian banking ETF ($0 fees) to buy and journal over. My thoughts are
    -Buy in small quantities to spread the risk (planning to buy small chunks over 10-15 days)
    -Gain any dividend income or stock gains over this period
    -Journal over and convert to USD
    Suggestions/ Thoughts on a cross listed ETF?

    1. I’m not aware of any cross-listed bank ETFs, however you could use this method for individual bank stocks. BMO, RY, TD, CM and BNS are all cross listed securities that can be used for Norbert’s Gambit.

    1. The online chat part only takes a few minutes. The several day wait is the time it takes the journal to settle, and unfortunately there’s no way around it.

  4. Would it work with, for example Royal Bank shares. Could these be journaled from Canadian account to US account (My broker is TD Waterhouse)

    1. Yes it does! Any cross-listed equity will work. Many of our major corporations are cross listed (Suncor, Big 5 banks, Enbridge, Telus, etc).

    1. Norbert’s Gambit will be tricky (and maybe impossible) for the EUR/CAD pair.

      First you’d need to find a stock or ETF that is cross-listed on the TSX and a European exchange. There isn’t an ETF in Canada that tracks the EUR/CAD exchange rate, so you’ll have to expose yourself to the price fluctuations of whatever security you find to do this, if one even exists.

      Then you’d have to make sure your brokerage allows you to own EUR directly, and that it’s willing to journal shares over to a European exchange. I believe Interactive Brokers can do this, being such a big player internationally, but most Canadian brokerages do not. Even then, they charge a hefty fee for trading on international exchanges, which might negate the benefits of Norbert’s Gambit in the first place.

      After that the process would be the same, but I’m unaware of anyone doing this successfully.

  5. you should also add a part about settling the trade in the currency of the trade itself. Its an option in account settings you need to select.

    1. Ack, this took me a while to find. It is only an option for "registered" accounts (TFSA, RRSP, RESP, etc.) and not plain margin accounts which always settle in the currency of the transaction.

      If anyone else is searching for the setting, log into your account at the Questrade website, then click on "Account Management" at the top and select "Account Management" from the list, then use the pull-down menu to select the registered account you want to change the settings for. Now at the bottom of the "Summary" list should be the "Currency settlement" setting. Click on the "edit"/pencil icon and you can select your preferred option.

    1. Good question, I’m not sure. It’s possible that it won’t work, because I know for a fact that it doesn’t work with Virtual Brokers. You just need to find out whether they let you journal shares between exchanges, if you can it should work.

  6. Thanks for this!
    I just wanted to add in that Questrade charges you to sell ETFs, so depending on the type of account you have, you could be paying $5-$10 in fees plus the ECNs, ATSs and/or SECs. Minimal, but not nothing and could cut into the money saved if you’re just moving a small amount.

    1. Good point, you need to be converting at least a few thousand dollars for it to be worth it. If it’s saving you 8$ and you’re paying 5$ in fees it’s just not worth the trouble. That said, you can avoid ECN fees by not removing liquidity. (Questrade has a page on their site that explains how this works).

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