Please note that PWL Capital Inc. has no affiliation to RBC Direct Investing and is publishing this video for the use of its clients. This content is published by PWL Capital Inc. for educational purposes only.
Hi, why your combined total in CAD and USD even increase after completing the north gambit? which was from 14986.25 to 15013.87. So we can even earn profit by doing this?
Awesome tutorial!! Thank you Justin!! I converted ~$30,000 CAD to USD for about $17 CAD. Without this method RBC would have charged me $450 on the conversion. This is amazing!!!
placed my first ever NG today... waiting for the RBC DI screen to show the new USD cash position... it surely feels so liberating from that typical banking/RBC opacity. Many thanks Justin.
This works well. I just tried it with 20K conversion and it actually saved me $159 by doing it this way instead of the usual cash transfer that RBC Direct Investing offers. I only paid the $9.95 commission on each trade. Thank you!!
Nice tutorial!!! Have a question though. I watch all your North gambit videos. Seems that RBC is the unique one because no phone call, no waiting period, etc. Just wondering whether I can do this in other brokerage or not? i.e. no phone call & waiting period in CIBC, BMO, etc. Also, don't we need to minus the commision fee when we calculate the amount of shares to purchase? I saw u minus it in other north gambit videos but not this one.
You give a very clear explanation of how to do Norbert’s Gambit at RBC Direct. I’m in the process of moving US $ into Canadian $. I bought DLR.U on the US side of my account and then proceeded to place an order to sell DLR on the Cdn side. Here’s the message I got: “We have detected you are trying to sell a position in a different currency from which you currently hold. Please review your order to prevent a potential foreign exchange.” Should I be concerned about this or just go ahead?
Thanks Justin. This video was very helpful and still applies today. Funny thing is this though. I was able to buy USD stocks immediately in my TFSA account right after I journaled my DLR shares to DLR.U. I did not have to wait for it to settle. However, for my margin account, I had to wait until the journal actually settled and zero''d out (T+1 day usually) before I could actually use the US$ buy USD stocks. There was also one occasion when I did have to call twice and chase RBC InvestDirect to settle the shares as they didn't do so after T+1 (actually wound up being T+3). That was a bit annoying as my capital wound up being tied down for two more days than I would have liked, but I was not charged interest.
Hi Justin, thanks for the video . couple of points you may want to include to make it clearer : - How much time will it take for USD to be available for purchase ? T+3 or instantly - how about capital gain tax ? is it something we may need to consider as we buy/sell ? - how currency exchange rate change can affect this during (T+3) time ? - effect of commission fees . based on my calculation , up to 1500$ , the cost of direct exchange with RBC is lower than NG because of commission fees so NG is only efficient for hight amounts . by the way , I did a comparison between this method and RBC currency exchange . based on my calculation , you save about 1.3% on sufficiently high amount. to give an idea you will save 340$ for CAD->USD on 40,000
Yep, I tried this for the first time ($10k) last Wednesday...the clearing DLR/DLR.U transaction happened on the Friday....works great, saved on exchange costs and no interest or negative balance fees.
@@Rexx0d0a Hi, so if we want to trade in USD we should plan ahead of time at least a couple of days, meaning your USD funds were available only two days after you executed NG? Thank you
Beware they have changed the UI quite a bit. You might end up buying and sell the same thing. Make sure you manually enter different symbol for sell instead of select "sell" button on your current holding.
@bernk - ETFs generally settle on the trade date (or "T") plus 2 business days (which means if you're buying an ETF, you need to have the cash available to pay for the shares by T+2, and if you're selling an ETF, you technically don't receive the cash until T+2. DLR and DLR.U are an exception, and now settle T+1 (or trade date plus one business day). This difference in settlement dates can cause debits in an account in certain situations.
@@JustinBenderCPM, thank you for your reply. Is T+1 not "better" than T+2? Is the warning only because the standard is T+2, and this may throw some off?
5 years later...not sure if you can help me but here it goes. I love that norberts gambit is instant with RBC, where questrade and wealthsimple can take days (or longer). While Rbc has some higher fees, I've also heard their platform is buggy and people have been locked out at times. Is Rbc worth it? Or is waiting for Questrade worth it, as it seems to be run by a more competent management.
@Kyle Mundy - I've never had many issues with RBC DI. If you're converting CAD to USD to buy US-listed ETFs in your RRSP, I would prefer RBC DI, as you can lose more than the extra commissions being out of the market at Questrade.
Hi Justin, Thanks for the great video. Do I just reverse the procedure if I were to convert USD to CAD? Also, do you know if I could do this with HSBC direct investing account? Thx
Jason19881128 : You can just reverse the procedure if you were converting USD to CAD. I’ve unfortunately never tried it at HSBC, so I’m not sure what the exact process is.
wow i wish had seen this video sooner, could have saved me a couple hundred dollars. oh well, life is our greatest teacher. Thanks Justin! One quick question, what happens after? with the positive and negative positions, do they offset after a few business days?
@Invest boring but stable: On settlement, RBC will transfer your shares of DLR to the US side of the account to offset the debit position in DLR.U. However, if they are late processing the transaction, they may hit you with debit interest (just call RBC DI and request to have it reimbursed).
@@JustinBenderCPM Hi Justin, thanks for that response, I have another question. What if with Norbert's gambit if a longer period such as a few years pass between my money going into the account to begin with and exit period, and the exchange rates increase or decrease dramatically, if I use Norbert's gambit, do I stand to gain or loss from the exchange rate substantial difference, outside of fees? But I guess, it's better to use Norbert's gambit either way to avoid the fee?
@@AverageAngel - If you convert your CAD to USD (using Norbert's gambit or any other conversion method) and the US$ appreciates relative to the Cdn$, you'll realize a capital gain when you convert your USD back to CAD.
@@JustinBenderCPM Thanks Justin, I would still need considerations for hedging currency risk in addition then i guess. What's your recommendation way of doing that?
@@AverageAngelu should buy the ETF and sell it immediately/ASAP. Otherwise u may either gain or lose money depends on the ask/bid price of the ETF and fx rate change.
So is the key to this that both DLR and DLRU exist on the same exchange? I saw another video saying that this could be done with any security that trades on multiple exchanges. so I tried this by buying BNS Bank of Nova Scotia stock traded on the NYSE with the proceeds coming from my RBC US trading account....and then tried to sell the equal number of BNS stock from the TSX account, settling into my RBC CAN account and it didn't work. I think I accidently just shorted BNS shares on the TSX because it credited my investment account....but it still had all my unsold NYSE BNS shares from my US account. I think maybe I have to 1) buy the DLR instead of BNS and then 2) sell it from the SAME EXCHANGE that i bought it from....this is an interesting day! Thanks for this video!
@Corey Kennedy - Norbert's gambit works with any security that has the option to settle in CAD or USD, and has the same CUSIP number. Even though DLR/DLR.U both trade on the TSX, they meet both of these requirements. You can also implement the gambit with inter-listed stocks (like Royal Bank and TD), but it's a bit more stressful (as their prices can move relatively quickly, possibly offsetting the benefit of the gambit).
Hi Justin; Ouch I will have to learn that trick in the future. I did not realize "exchange rate costs" Can to USD collected by RBC. I will check and see amounts and then also can increase profit on reverse exchange! (micro learning curve)! Jan13th started with RBC direct investing skipped practice went full bull on TSLA now I'm 140% profit thought about us cap gain taxes and then Canada revenue agency. I still want to hold Tesla stock as much as possible. I wonder about borrowing money (being low interest rates which could maybe used as expense deduction against cap gain tax). Question; Is it better to get loan in us or Canada (with stock as collateral) in the purchasing of us Tesla products?
Very helpful. Thank you. Question: Do I need to set up the US dollar RRSP account in advance? Or does the US account option pop up automatically when selecting between currency accounts when performing Norberts Gambit?
After converting CDN funds to USD can you purchase any USD stocks outside of RRSP immediately or have to call RBC Dir. Invest. to place the order and complete the Wben forms for tax purposes. Thks,
@@JustinBenderCPM @stan188 : Yes and also like Questrade unless Questrade's systems have improved within the past 6 months. Appreciate knowing the Sell order can be put in right away! Greatly appreciate this insightful video! *thumbs up*
@@DanielPronych questrade took 4 business days for me. In my opinion, that is too long. I'll be setting up a direct investing account with RBC now for trades I want to do quickly.
Hi Justin, I have a question. If you do this in a regular account meaning NOT TAX SHELTERED, are there any tax implications? doesn't seem like it since buying and selling price is about the same, correct?
@bobesfanchi - Unfortunately, there would be some tax implications. You could need to convert the USD purchase or sale amount for DLR.U to CAD, using the FX rate on the settlement date (T+1 now).
Hello Justin, I tried using this method on my margin practice account and it always rejected the sell offer. Is there any problem with this method on RBC now?
@@JustinBenderCPM I have been doing this for a couple of years now. RBC seems to now reject the orders until the buy has been filled. Its been the last 2 times I've tried to do a buy, then sell while the buy hasn't been filled, and its been rejected. This is not in a practice account.
@iamsopure - You're very welcome! You can purchase a US security before the sale of DLR.U settles, as long as it settles on the same day as your DLR.U sale settlement. RBC is sometimes tardy with processing the journal of DLR from the CAD account to the USD account (which make trigger their system to charge you debit interest). If this ever occurs, call them to request a reimbursement.
@@JustinBenderCPM and to confirm, it can be any US stock/security that you purchase immediately with your newly converted USD, not just an ETF as the video suggests, correct?
@@andymassacre - It can generally be any U.S. stock/security (it doesn't need to be an ETF), as long as the purchase settles on the same day as your DLR.U sale.
Hi Justin, if you trade DLR/DLR.U with a stat holiday in US (but not Canada) during settlement period, it shouldn't be an issue and trade should still settle in T+3 days, right? Also can we withdraw USD cash on T+3rd day despite it showing negative USD balance that day without interest charges?
las3r007 - correct! It's only where there's a Canadian holiday during the settlement period (converting from CAD to USD and buying US securities) where you need to wait an extra trade date before buying your U.S. stocks/ETFs. You should be able to request a withdrawal of cash on the settlement date (you may need to contact RBC directly to ensure their systems will allow it.
Hi Justin, what a great tutorial. I was trying to convert USD to CAD. However, after I sold the shares on the CAD account, it didn't show anything changed in my portfolio. How long does it take usually to show?
Hi Justin, does this method work for interlisted stocks such as Shopify or BlackBerry. I owned some shopify stocks in TSE and would like to sell it. Can I sell it in USD instead of CAD? Thanks.
@Sue-Lee Pring: If you're purchasing a US-listed ETF in the US dollar account that settles in T+3 days, you can place the buy order on the same day as the buy/sell trades for DLR/DLR.U (just watch out for US holidays that differ from Canadian holidays, as this can cause the settlement dates of the US-listed and Canadian-listed trades to differ, which may cause a debit position for a day).
@xyz1112: The RBC rep is absolutely wrong. There is a hidden FX conversion spread (which means that RBC gives you less US dollars than you deserve and pockets the rest without you knowing).
@Walter Mercado: Depends on the brokerage, the amount you're converting, and the FX rate the brokerage is offering at the time. To calculate your specific savings, follow these steps: - Take the amount you're converting: $25,000 CAD - Subtract the trading commission to buy DLR: $25,000 CAD - $9.95 CAD = $24,990.05 CAD - Divide by the current ask price of DLR: $24,990.05 / $13.18 CAD = 1,896.05842 shares (I understand that you can't buy partial shares, but this is just for an example) - Multiply # of shares by the current bid price of DLR.U: 1,896.05842 shares x $10.03 USD = $19,017.47 USD - Subtract the trading commission to sell DLR.U: $19,017.47 USD - $9.95 USD = $19,007.52 USD Next, call your brokerage and ask them how many US dollars they will give you for $25,000 CAD. Whatever the difference is, that's your savings. You need to go through this process whenever you want to determine your savings using Norbert's gambit (there's no general rule of thumb).
@Sid Hacini: Your first trade date would be the following business day when markets open (if the trade fills that day). I would recommend only trading when the markets are open though.
Just did this, thanks for the great video. How many hours or days before the short is cleared and there are no negative balances on the US DLR short position ?
@dropd4 thewin: The account normally gets cleaned up in the next 5 business days. Keep an eye on your account though, as RBC may try to charge you debit interest if they're late processing the journal (just call them to reimburse you if they charge you debit interest).
Should I let some money to pay the commission in CAD and USD? I want to convert USD to CAD. i.e. 1- transfer 100$ USD 2- BUY DLR.U for 90$ USD (9 @ 10$/unit) (10$ left for commission) 3- SELL 9 DLR @ 13$ CAD = 117$ 4- Cash in 107$ CAD (117$ CAD -10$ CAD)?
don't do NB for such a small amount. itll cost you around $23 cad and exchange is usually 1.5-2.5%. This is only worth it if the your banks asking price is higher than the cost of purchasing shares, which is 9.95 in each currency. check by looking up cad to usd exchange on google, then go on transfer funds on your bank account, and click calculate exchange. subtract the bank quote from the google amount. if it's more than $9.95 CAD + $9.95 USD, use NB. Your terms of use will tell you how much the conversion costs thru your bank. this means if ur bank asks for 2.5%, you lost $2.5 cad to convert $100 cad to usd
@Sue-Lee Pring: If you already have actual USD cash in your account, you could include this amount when purchasing your US ETF (if you want to purchase more of it). RBC misleads investors in the trading screen - they take your CAD cash and display it in US dollars when you are trading in your USD account. Please ensure that this is not the case - you may have less US dollars than you think).
I completed this last week (except it was USD to CAD) and the trades settled a few days later, but my investments state I have a large negative investment & market value in CAD and still have positive in USD. Is that normal?
Hi Justin, I just followed your steps for a large conversion from CAN to USD. After everything has settled I'm now wanting to transfer the funds to my RBC US Currency account, but I'm being prompted for a 30% withholding. I really hope this isn't the case, as I'm about to purchase RE in the US. Here are my options when trying to make the transfer Withdrawal type Gross (before withholding tax) Required information | Net (after withholding tax) Required information Is there a phone # where I can call you at? Thank you.
That's the first I've heard of that (is it a margin account?). Out of curiousity, roughly how much was the conversion and have you figured everything out now?
If you've done the conversion from your RRSP account then it would. If you take money from your RRSP account (aside from some exception), you will be hit by a withholding tax.
I’m a bit confused as to why this is necessary with RBC. I thought converting your funds from the Canadian Tfsa account to the USD Tfsa account is free... what would I be saving?
RBC will charge roughly 1.5% o 2% in hidden fees for the currency exchange. I did this last month with $25k CAD and was charged roughly $400 in fees for this. I'll be doing this Norbits Gambit today and have worked out it will cost me $20 in trading comission and then another $40 in the difference in price between the bid/ask on DLR
@@pacmancalgary thanks for the answer! Where do you go to see how much they’ve charged for the currency exchange? It seems they’ve hid the fees REALLY well
@@jingyaliu696 You would need to look at the post rate and then see what rate they give you when you do the exchange. There is usually a 1.5 %- 2% spread where they make their cut. I suppose this would only make sense to do depending on the amount you want exchanged. Keep in mind using this procedure is going to have at least $20 in commission fees for trading plus the difference between the bid/ask price when you buy and sell. I'm not sure what the dollar threshold amount it for this to make sense vs just transferring it and paying the hidden FX fees the bank charges.
assuming this goes through in market hrs, should i wait for the settlement or can/should i immediately sell dlr.u when the market opens (and dlr is bought)? i'm worried about the interest that may come from selling shares i "don't have"
@Jen McConnell - At RBC Direct Investing, you can immediately buy and sell DLR and DLR.U on the same trading day (you don't need to wait for settlement). To ensure RBC does not charge you debit interest, I would recommend calling them on the settlement date to ensure they process the journal of DLR shares to the USD account that day (to offset the debit position).
@@JustinBenderCPM That finally answers my question! UGHHH. In that case, would a Cash or Margin account be better...? I intend to hold some stocks long and also short some in 7 day cycles or so (I'm not sure what tax implications a cash vs margin would have)
@@ro0t14 To make sure it works flawlessly before opening a real account and using real money! (it's like practicing black jack strategies before gambling your money at the casino) Although as we unfortunately find out, not all features work on practice accounts!
@@genkikai9992 If you're new to trading (and it sounds like you are), I suggest sticking with Canadian listed Stocks and ETFs. Just buy a Canadian ETF that holds the US stocks and save yourself the complexities of currency conversion. If you must trade US listed ETF's, I suggest you do it in a tax sheltered account (RSP or TFSA) so you don't have to worry about the tax implications of your trades (which can get complex). As far as implications on cash vs margin account, both accounts will function identically in terms of Norberts Gambit. A Margin account just means you can borrow against the stocks you hold in your account (like a line of credit).
The Bank of Canada exchange rate is 1.2489% for U.S. to Can. $. Royal Bank's exchange rate is 1.209%. That's over 3%. (April 24, 2021). So Royal could charge people $3200 to exchange $100,000 U.S. dollars. Or you could pay $20 in trade fees. Let's erect a statue to Sir Norbert for his noble quest to stick it to the bankers.
I tried this on Friday at around 1:00pm. It took a while for the DLR shares to get filled. Then when I sold the shares from DLR.U they were half filled before the trading day ended and the order ended up not getting filled. I am wondering why it took so long to fill the order. It was RBC Direct investing.
@Aaron K: Unfortunately, Scotia iTRADE does not allow Norbert's gambit in their RRSP accounts (you can convert CAD to USD in their non-registered accounts though).
So in your online banking, you can open an account called "RBC U.S. High Interest eSavingsTM,." This account will let you exchange your cnd$ to us$ for a small fee before sending the money over to direst investing. It would be a better option if your working with less than $1200 cnd (based on my results). But if your working with more than that, than Justine's method looks very promising!
@Bon Jour: You need to sell DLR.U before you can purchase your US-listed securities (so you would not have any stock market exposure during this waiting period (just US dollar exposure via DLR).
@@raknar427 Even though it says Part Filled, it could actually have been filled an hour or two later, without the status actually getting updated. So I was able to sell without any issue in the end.
@@QuickdrawMcGraw360 You're being charged for each part separately with 9.95. Figure out best price on the market and make sure it's still worth it if parts are filled. also, don't sell odd lots if you can help it
Thanks a bunch for the tutorial, I was planning to use the RBC platform to perform a Norbert Gambit and I was wondering about the specifics of the platform itself. Out of curiousity, why do a limit buy/sell as opposed to a market sale? Since you are setting your limit to current market, wouldn't not work with a market buy/sell?
@Alain Bourgault: A market order works as well, but if there is a strange price discrepancy mid-trade (i.e. the price of the share doubles for no reason at all), you'll be stuck paying the higher price. Although it doesn't happen often, the results could be devastating. The limit order eliminates this market order risk.
@dmespolet: It sure can! Just buy DLR.U with your US dollars on the US dollar side of your account, and sell DLR on the Canadian dollar side of your account (both securities trade on the Canadian stock market).
hi Justin, some other youtubesr in the similar vedio meertioned that after we purchase DLR in cad account, we need to call rbc to journal over( which is put the dlr in the cad account side to us account side), do we need to call for journal over ? i treid once with your technology and it seems work but i dont know if there is anything missing that lead to other cost?
@Rachel Huang PREC* - It's best to call RBC DI on the settlement date to request the journal, as they are sometimes late with processing (which can create a debit interest charge in your account), in which case, you'll need to call them anyways to reimburse the charge.
And when I call the rbc to journal over. The eft already decrease by 60( I think 0.2% What should I do ? Should I journal over first and wait till it increase back to the price I bought then sell it.
@@rachelhuangprec6907 - To convert CAD to USD, you need to buy DLR on the CAD side of your account on the Canadian market and immediately sell DLR.U on the USD side of your account on the Canadian market (same day). To avoid possible debit charges, call RBC DI on the settlement date (trade date + 2 business days) first thing in the morning and ask them to journal your shares of DLR from the CAD side of the account to the USD side of your account.
@@JustinBenderCPM so made two transaction, 1st one: i follow your instruction and bought dlr at 12.83 and sell at 10.09,(i convert 32084.95 cads to 25215.05 us ) the exchange rate is 1.27245. i do not call rbc to journal over. i purchased us stock direcly. 2nd one: i bought XXX share of dlr at 12.92 and i called to journal over, and want to sell at 10.09 this morning, in the rbc activities , it shows they put it in us side already but the amount is XXX less 173.95us dollars . if i sell it at 10.09 now, it shows that i will have XXXX us, the exchange rate will be 1.2864. however, the RBC direct investing current exchange rate is only 1.27245.
3:16 how soon will RBC offset the position and clear up my account anyway? It has been 3 business days and my account still showing +DLR and -DLR.U being there and kicking.
@@JustinBenderCPM Hello Justin thank you for replying. It is not possible to call RBC DI these days due to the current WSB market in Feb 2021. There are no agents pick up the call and my 10 attempts all resulted in RBC hanging up on me. However, RBC did clear out my +DLR and -DLR positions today, it’s the 4th business day since I did the Norbert Gambit. The problem is it looks like they applied the CAD/USD forex rate of today, and not the forex rate from 4 days ago when I placed the order. At 4 days ago, CAD/USD was higher than today’s. As the result, when I exchanged 25,000 CAD, RBC made me pay a differential of 80 CAD! It is quite BS to me.
@@AthenaCannon - If you bought and sold your DLR/DLR.U pair on the same day (which is possible at RBC DI), you would have locked in the FX rate at that time. So you may just be misinterpreting the account details (which is easy to do).
@@JustinBenderCPM The settlement date for my first transfer is tomorrow, and I'm unsure if I should call RBC DI to ensure that they journal - do you think it's worth it just in case they don't, or is it better to wait and see? Thanks
I tried to use the Norbert's Gambit to convert $1507 CAD to USD, but it was $3 more in contrast to using RBC DI exchange rate page. I was just wondering why I wasn't able to save money using Norbert's Gambit. 😔
@The Awasa: Norbert's gambit is generally only cheaper for amounts of ~$3,000 CAD and above (due to the cost of the two extra trading commissions at most brokerages). To calculate your specific savings prior to placing your trades, follow these steps (I've used a hypothetical $25,000 CAD as the conversion amount): - Take the amount you're converting: $25,000 CAD - Subtract the trading commission to buy DLR: $25,000 CAD - $9.95 CAD = $24,990.05 CAD - Divide by the current ask price of DLR: $24,990.05 / $13.18 CAD = 1,896.05842 shares (I understand that you can't buy partial shares, but this is just for an example) - Multiply # of shares by the current bid price of DLR.U: 1,896.05842 shares x $10.03 USD = $19,017.47 USD - Subtract the trading commission to sell DLR.U: $19,017.47 USD - $9.95 USD = $19,007.52 USD Next, call your brokerage and ask them how many US dollars they will give you for $25,000 CAD. Whatever the difference is, that's your savings. You need to go through this process whenever you want to determine your savings using Norbert's gambit (there's no general rule of thumb).
@@JustinBenderCPM Thank you so much for the quick response. It makes sense with $9.95 commission fees. For next time, I will keep in mind to use it for converting more than $3k.
Don't forget when selling the DlR.U, the commission fee is in USD, so if we're conservative and say $10 USD = $15 CAD, your effective CAD amount to transfer is whatever you have, less $25, and also subtract 0.2-0.3% to take into account the bid/ask spread. On a $1507 amount, that's (1507-25)*0.998 = $1479.03 effective CAD to transfer to USD At today's rate, the $1482.05 effective CAD would net you $1114.61 USD With the standard RBC transfer, you would lose 1.5% which would just be $1507 CAD * .985 = $1484.39 effective CAD which would net you $1118.67 USD. TL:DR: Norbert's Gambit 0.2% spread: $1114.61 USD RBC's 1.5% exchange: $1118.67 USD Verdict: Reversing the math, to equal RBC's 1.5% rate, you would need to change about $1920 CAD to USD to break even and eventually turn a profit using Norbert's Gambit. (Not taking into account tax implications from capital gains/losses and that stuff) P.s. currently looking into transferwise, I heard they're a cheap option as well
@P M - It can be done in reverse, and you can also use inter-listed stocks instead of DLR/DLR.U (although this can be a bit intimidating for the average DIY investor)
@@JustinBenderCPM For example i googled interlisted stocks, BMO is an option can i use that on RBC direct investing, i read somewhere they banned norberts gambit?
@@PM-dz3fk - Any inter-listed stocks (like BMO) will work (just use caution, as you will be exposed to BMO stock until you place the offsetting sale). This is why I recommend using DLR/DLR.U instead. Norbert's gambit still works at RBC DI (we just processed a gambit there last week).
@@JustinBenderCPM DLR.U doesnt seem to exist i was trying it, being exposed to BMO ? wouldnt i be exposed to DLR as well, sorry i need a bit of educating here. i was thinking of buying shopify in CAD and selliing it off in USD , ( this is similar isnt it)?
@@PM-dz3fk - DLR or DLR.U just hold U.S. dollars, so you would be exposed to the U.S. dollar for a short period of time (BMO is an individual stock, so it can fluctuate in price arguably quicker than DLR or DLR.U). DLR.U does exist (on the Canadian stock exchange - please watch the video again carefully step-by-step). As you are having some issues, I would recommend trying it out with a smaller amount first to get the hang of it (like $100). SHOP would work as well. Any interlisted stock would work.
I just tried this but unfortunately my order to sell DLR.U was rejected. I also saw an additional message telling me the security that I was trying to sell in USD. I called RBC earlier and they told me that the account holds both USD and CAD so there shouldn't have been any issues. That would be great to hear if anyone has any ideas on why my trade was rejected. thanks for the video by the way.
@@JustinBenderCPM I tried it in my TFSA account. I don't have a practice account. I bought DLR but was unable to sell DLR.U as my trade was rejected. Things may have changed which is possible. Thanks!
@@delphinium21 - It should have worked. Did you sell DLR.U on the "Canadian" stock market on the "U.S. dollar" side of your TFSA? Did you use a limit order exactly on the bid price (and ensure that it filled before the end of the day)?
@@JustinBenderCPM Thanks. I did pick the Canadian market but USD TFSA side could be the issue. I called them in advance to make sure that it accepts USD they said yes, the accounts hold both currencies but that could be the issue then. Next week I will try on the non-registered account which I know can handle both currencies for sure. I will keep you posted. Thanks again!
I wish i knew this...i got charged about $400 just to conver 10k. I called rbc prior but the agent wasn't knowledgeable at all and kept telling me i wouldnt be charged for a conversion fee which was bull. $400 down the drain :(
hmm, i tried this in my rbc practise account, but it didn't show either in the my portfolio, though i did do this on the weekend after hours. Is that why it didn't show up, cause it was the practise account? How long does it take for both transactions to settle so that I get my money and can invest it right away?
@Invest boring but stable: Correct - Norbert's gambit doesn't work in RBC practice accounts. If you're buying stocks/ETFs with the proceeds from the gambit, you can generally purchase them on the same day as the other trades (unless there's a Canadian holiday during the settlement period, in which cash you'll need to wait an extra trading day to buy the U.S. stocks/ETFs.
I made a practice RBC account to do this. The order gets rejected each time and RBC says " We were unable to process this order as there were insufficient holdings in your account. Please verify your account holdings before resubmitting this order." Does this work anymore EDIT: NVM I guess it doesn't work on practice accounts
@@JustinBenderCPM Thanks, I loved your tutorial. But maybe you could add a button/notification in the video that says it doesn't work in the practice, since I bet a lot of us spent a chunk of time playing with it before realizing it doesnt work
ゆいれい - It's not the Norbert's gambit process that was the issue. It was your inexperience with placing limit orders and adjusting them until they are completely filled.
Sorry, what's the benefit of doing this? Is it to save money on constrain fees? If I have RRSP in US dollars and RRSP in Canadian dollars, why wouldn't I just transfer US to Canadian in my RRSP account.
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Please note that PWL Capital Inc. has no affiliation to RBC Direct Investing and is publishing this video for the use of its clients. This content is published by PWL Capital Inc. for educational purposes only.
Hi, why your combined total in CAD and USD even increase after completing the north gambit? which was from 14986.25 to 15013.87. So we can even earn profit by doing this?
Thanks for this very informative video!
@@柘佴卅拉蒙特 Hey, very interesting! Did you get an answer or do you know it by now?
Can we do this in reverse? USD to CAD?
Can you do one with the other major banks (CIBC, TD, etc.)
Awesome tutorial!! Thank you Justin!! I converted ~$30,000 CAD to USD for about $17 CAD. Without this method RBC would have charged me $450 on the conversion. This is amazing!!!
@B Squared: Excellent news! (please feel free to forward me a cheque for 50% of your cost savings ;)
placed my first ever NG today... waiting for the RBC DI screen to show the new USD cash position... it surely feels so liberating from that typical banking/RBC opacity. Many thanks Justin.
This works well. I just tried it with 20K conversion and it actually saved me $159 by doing it this way instead of the usual cash transfer that RBC Direct Investing offers. I only paid the $9.95 commission on each trade. Thank you!!
@Peter C. - I'm so glad it worked out - congratulations! :)
Great video. Still relevant and still works perfectly for RBC Direct Investing in 2021.
Good to know! Thanks Michael
Also for those wondering, it takes a few days for RBC to clean up the journaling, but they do get around to it without issue.
@@micpatleb how many days after the settlement date does it take for them to clean it up?
Nice tutorial!!! Have a question though. I watch all your North gambit videos. Seems that RBC is the unique one because no phone call, no waiting period, etc. Just wondering whether I can do this in other brokerage or not? i.e. no phone call & waiting period in CIBC, BMO, etc. Also, don't we need to minus the commision fee when we calculate the amount of shares to purchase? I saw u minus it in other north gambit videos but not this one.
You give a very clear explanation of how to do Norbert’s Gambit at RBC Direct. I’m in the process of moving US $ into Canadian $. I bought DLR.U on the US side of my account and then proceeded to place an order to sell DLR on the Cdn side. Here’s the message I got:
“We have detected you are trying to sell a position in a different currency from which you currently hold. Please review your order to prevent a potential foreign exchange.”
Should I be concerned about this or just go ahead?
Thanks Justin. This video was very helpful and still applies today. Funny thing is this though. I was able to buy USD stocks immediately in my TFSA account right after I journaled my DLR shares to DLR.U. I did not have to wait for it to settle. However, for my margin account, I had to wait until the journal actually settled and zero''d out (T+1 day usually) before I could actually use the US$ buy USD stocks. There was also one occasion when I did have to call twice and chase RBC InvestDirect to settle the shares as they didn't do so after T+1 (actually wound up being T+3). That was a bit annoying as my capital wound up being tied down for two more days than I would have liked, but I was not charged interest.
Thanks for the great video! I see you've put a warning of DLR now settle T+1. Will this still work in Jun 2024? Thanks
Just converted over a $100k with no problems. Thanks for the great video!
@Mike R: You're very welcome!
Hi Justin,
thanks for the video . couple of points you may want to include to make it clearer :
- How much time will it take for USD to be available for purchase ? T+3 or instantly
- how about capital gain tax ? is it something we may need to consider as we buy/sell ?
- how currency exchange rate change can affect this during (T+3) time ?
- effect of commission fees . based on my calculation , up to 1500$ , the cost of direct exchange with RBC is lower than NG because of commission fees so NG is only efficient for hight amounts .
by the way , I did a comparison between this method and RBC currency exchange . based on my calculation , you save about 1.3% on sufficiently high amount. to give an idea you will save 340$ for CAD->USD on 40,000
Yep, I tried this for the first time ($10k) last Wednesday...the clearing DLR/DLR.U transaction happened on the Friday....works great, saved on exchange costs and no interest or negative balance fees.
Brent Done
So no fees at all. Just plain and simple exchange?
rotaxrider The standard $9.95 transaction fee still applies, so this is not for very small transactions
@@Rexx0d0a Hi, so if we want to trade in USD we should plan ahead of time at least a couple of days, meaning your USD funds were available only two days after you executed NG? Thank you
Beware they have changed the UI quite a bit. You might end up buying and sell the same thing. Make sure you manually enter different symbol for sell instead of select "sell" button on your current holding.
Great video, would you be able to make a new one using RBC's new web format? Thx
For the love of God, thank you Sir
Did you do this? Does it still work? This video is 4 years old so I just wanted to make sure. Thanks
Thank you for the very clear tutorial, but what does "DLR and DLR.U now settle T+1" mean?
@bernk - ETFs generally settle on the trade date (or "T") plus 2 business days (which means if you're buying an ETF, you need to have the cash available to pay for the shares by T+2, and if you're selling an ETF, you technically don't receive the cash until T+2.
DLR and DLR.U are an exception, and now settle T+1 (or trade date plus one business day). This difference in settlement dates can cause debits in an account in certain situations.
@@JustinBenderCPM, thank you for your reply. Is T+1 not "better" than T+2? Is the warning only because the standard is T+2, and this may throw some off?
Hi, I have an RBC Direct Investment Margin account, not RRSP. Would that work too? Thanks!
@Ken Dai: Norbert's gambit also works in taxable accounts.
Thank you!!
5 years later...not sure if you can help me but here it goes.
I love that norberts gambit is instant with RBC, where questrade and wealthsimple can take days (or longer). While Rbc has some higher fees, I've also heard their platform is buggy and people have been locked out at times. Is Rbc worth it? Or is waiting for Questrade worth it, as it seems to be run by a more competent management.
@Kyle Mundy - I've never had many issues with RBC DI. If you're converting CAD to USD to buy US-listed ETFs in your RRSP, I would prefer RBC DI, as you can lose more than the extra commissions being out of the market at Questrade.
Hi Justin, Thanks for the great video. Do I just reverse the procedure if I were to convert USD to CAD? Also, do you know if I could do this with HSBC direct investing account? Thx
Jason19881128 : You can just reverse the procedure if you were converting USD to CAD. I’ve unfortunately never tried it at HSBC, so I’m not sure what the exact process is.
wow i wish had seen this video sooner, could have saved me a couple hundred dollars. oh well, life is our greatest teacher. Thanks Justin! One quick question, what happens after? with the positive and negative positions, do they offset after a few business days?
@Invest boring but stable: On settlement, RBC will transfer your shares of DLR to the US side of the account to offset the debit position in DLR.U. However, if they are late processing the transaction, they may hit you with debit interest (just call RBC DI and request to have it reimbursed).
@@JustinBenderCPM Hi Justin,
thanks for that response, I have another question. What if with Norbert's gambit if a longer period such as a few years pass between my money going into the account to begin with and exit period, and the exchange rates increase or decrease dramatically, if I use Norbert's gambit, do I stand to gain or loss from the exchange rate substantial difference, outside of fees? But I guess, it's better to use Norbert's gambit either way to avoid the fee?
@@AverageAngel - If you convert your CAD to USD (using Norbert's gambit or any other conversion method) and the US$ appreciates relative to the Cdn$, you'll realize a capital gain when you convert your USD back to CAD.
@@JustinBenderCPM Thanks Justin, I would still need considerations for hedging currency risk in addition then i guess. What's your recommendation way of doing that?
@@AverageAngelu should buy the ETF and sell it immediately/ASAP. Otherwise u may either gain or lose money depends on the ask/bid price of the ETF and fx rate change.
So is the key to this that both DLR and DLRU exist on the same exchange? I saw another video saying that this could be done with any security that trades on multiple exchanges. so I tried this by buying BNS Bank of Nova Scotia stock traded on the NYSE with the proceeds coming from my RBC US trading account....and then tried to sell the equal number of BNS stock from the TSX account, settling into my RBC CAN account and it didn't work. I think I accidently just shorted BNS shares on the TSX because it credited my investment account....but it still had all my unsold NYSE BNS shares from my US account. I think maybe I have to 1) buy the DLR instead of BNS and then 2) sell it from the SAME EXCHANGE that i bought it from....this is an interesting day! Thanks for this video!
@Corey Kennedy - Norbert's gambit works with any security that has the option to settle in CAD or USD, and has the same CUSIP number. Even though DLR/DLR.U both trade on the TSX, they meet both of these requirements.
You can also implement the gambit with inter-listed stocks (like Royal Bank and TD), but it's a bit more stressful (as their prices can move relatively quickly, possibly offsetting the benefit of the gambit).
Hi Justin,
So if I open a RRSP account at RBC, I got both CAD and USD accounts automatically?
@Ming Lou: You are correct - at RBC Direct Investing, the USD side of the account is automatically opened when you set-up a CAD account.
thanks
I am learning to use NG to convert $100k from CAD to USD. How to compare RBC Direct Investing and Questrade in terms of the fees?
Hi Justin;
Ouch I will have to learn that trick in the future. I did not realize "exchange rate costs" Can to USD collected by RBC. I will check and see amounts and then also can increase profit on reverse exchange! (micro learning curve)!
Jan13th started with RBC direct investing skipped practice went full bull on TSLA now I'm 140% profit thought about us cap gain taxes and then Canada revenue agency. I still want to hold Tesla stock as much as possible. I wonder about borrowing money (being low interest rates which could maybe used as expense deduction against cap gain tax). Question; Is it better to get loan in us or Canada (with stock as collateral) in the purchasing of us Tesla products?
Very helpful. Thank you. Question: Do I need to set up the US dollar RRSP account in advance? Or does the US account option pop up automatically when selecting between currency accounts when performing Norberts Gambit?
@janerikborge - I believe USD side of the accounts are already available (just check to be certain).
Thanks for the video. Are there any options like this for other currencies (EUR, JPY..)?
After converting CDN funds to USD can you purchase any USD stocks outside of RRSP immediately or have to call RBC Dir. Invest. to place the order and complete the Wben forms for tax purposes. Thks,
Whoa, no phone call to trader needed (unlike BMO)!
@stan188: That's right (but please make sure that you watch your transaction history to ensure that RBC doesn't charge you any debit interest).
@@JustinBenderCPM @stan188 : Yes and also like Questrade unless Questrade's systems have improved within the past 6 months. Appreciate knowing the Sell order can be put in right away! Greatly appreciate this insightful video! *thumbs up*
@@DanielPronych questrade took 4 business days for me. In my opinion, that is too long. I'll be setting up a direct investing account with RBC now for trades I want to do quickly.
Hi Justin, I have a question. If you do this in a regular account meaning NOT TAX SHELTERED, are there any tax implications? doesn't seem like it since buying and selling price is about the same, correct?
@bobesfanchi - Unfortunately, there would be some tax implications. You could need to convert the USD purchase or sale amount for DLR.U to CAD, using the FX rate on the settlement date (T+1 now).
Hi Justin, could you please do a video about how to do Norberts Gambit with Questrade? Thanks!
Good info. The best is that you don't need to call in, and it exchanges immediately.
Agreed! Appreciate this info!
When you initially purchased DLR, did you wait till your order has been approved and then proceed on selling it through DLR.U?
@@doublells9066 You can do it immediately. It takes a few days to settle.
@@CommandoMaster Can you use the funds immediately to buy stocks, or do you have to wait for it to settle after a few days?
@@AverageAngel I think you gotta wait til it settles because you need to sell DLR.U to get USD and buy stocks.
Does this method work for different banks like TD?
@Andy D. Lee: It does, but the process is slightly different: th-cam.com/video/BwUyQm60F_k/w-d-xo.html
So in doing this does it charge you 9.95 to buy and 9.95 dollars to sell?
@caper087 - Correct - so you don't want to implement this strategy to convert small amounts.
Hello Justin, I tried using this method on my margin practice account and it always rejected the sell offer. Is there any problem with this method on RBC now?
@Abiodun Adeyanju - Norbert's gambit doesn't work in RBC DI's practice accounts (you actually have to try it out for real).
I have the same issue with practice account. Did you try it for real ?
@@Den-wn9vj - It doesn't work in a practice account. The video example is a live "real" example.
@@JustinBenderCPM I have been doing this for a couple of years now. RBC seems to now reject the orders until the buy has been filled. Its been the last 2 times I've tried to do a buy, then sell while the buy hasn't been filled, and its been rejected. This is not in a practice account.
@@topgamer7 - I'd suggest waiting until the buy settles then.
Thanks Justin! Awesome series
No bullshit, very well explained. Thank you.
Hi Justin, thanks a lot for the amazing tutorial. Just wondering if its possible to purchase any US security before the DLR.U sell is settled?
@iamsopure - You're very welcome! You can purchase a US security before the sale of DLR.U settles, as long as it settles on the same day as your DLR.U sale settlement.
RBC is sometimes tardy with processing the journal of DLR from the CAD account to the USD account (which make trigger their system to charge you debit interest). If this ever occurs, call them to request a reimbursement.
@@JustinBenderCPM and to confirm, it can be any US stock/security that you purchase immediately with your newly converted USD, not just an ETF as the video suggests, correct?
@@andymassacre - It can generally be any U.S. stock/security (it doesn't need to be an ETF), as long as the purchase settles on the same day as your DLR.U sale.
Hi Justin, if you trade DLR/DLR.U with a stat holiday in US (but not Canada) during settlement period, it shouldn't be an issue and trade should still settle in T+3 days, right?
Also can we withdraw USD cash on T+3rd day despite it showing negative USD balance that day without interest charges?
las3r007 - correct! It's only where there's a Canadian holiday during the settlement period (converting from CAD to USD and buying US securities) where you need to wait an extra trade date before buying your U.S. stocks/ETFs.
You should be able to request a withdrawal of cash on the settlement date (you may need to contact RBC directly to ensure their systems will allow it.
You do not have to call the broker to "journal" the shares into the US etf?.
Hi Justin, what a great tutorial. I was trying to convert USD to CAD. However, after I sold the shares on the CAD account, it didn't show anything changed in my portfolio. How long does it take usually to show?
about 2 business days.
Hi Justin, does this method work for interlisted stocks such as Shopify or BlackBerry. I owned some shopify stocks in TSE and would like to sell it. Can I sell it in USD instead of CAD? Thanks.
Does this work with TD?
my problem is that i both shares in USD and i only have CAD in the account
if i do all that i should be fine?
Do you have to wait T+3 days for the cash to be deposited in the account?
@Sue-Lee Pring: If you're purchasing a US-listed ETF in the US dollar account that settles in T+3 days, you can place the buy order on the same day as the buy/sell trades for DLR/DLR.U (just watch out for US holidays that differ from Canadian holidays, as this can cause the settlement dates of the US-listed and Canadian-listed trades to differ, which may cause a debit position for a day).
Thanks for the video Justin. Do you know what the % fee would be with RBC DI if i didn't use Norbert's Gambit?
@Cedric Meier: It would depend on the amount - I would estimate between 0.75% and 1.00% (but you should contact RBC to confirm)
I asked RBC and they said there is no conversion fee. Is it like a hidden fee when you convert?
@xyz1112: The RBC rep is absolutely wrong. There is a hidden FX conversion spread (which means that RBC gives you less US dollars than you deserve and pockets the rest without you knowing).
DIY Investing with Justin Bender Thanks for the response
Does this still work in 2020? Thanks for posting this video btw.
@Klay Thompson - Yes indeed
How much are you saving in conversion costs by doing it this way?
@Walter Mercado: Depends on the brokerage, the amount you're converting, and the FX rate the brokerage is offering at the time.
To calculate your specific savings, follow these steps:
- Take the amount you're converting: $25,000 CAD
- Subtract the trading commission to buy DLR: $25,000 CAD - $9.95 CAD = $24,990.05 CAD
- Divide by the current ask price of DLR: $24,990.05 / $13.18 CAD = 1,896.05842 shares (I understand that you can't buy partial shares, but this is just for an example)
- Multiply # of shares by the current bid price of DLR.U: 1,896.05842 shares x $10.03 USD = $19,017.47 USD
- Subtract the trading commission to sell DLR.U: $19,017.47 USD - $9.95 USD = $19,007.52 USD
Next, call your brokerage and ask them how many US dollars they will give you for $25,000 CAD. Whatever the difference is, that's your savings. You need to go through this process whenever you want to determine your savings using Norbert's gambit (there's no general rule of thumb).
Hey, so does this process get prolonged if I’m doing this while the market is closed?
@Sid Hacini: Your first trade date would be the following business day when markets open (if the trade fills that day). I would recommend only trading when the markets are open though.
Does this work for a TFSA account as well?
I would also like to know
Yes.
Just to clarify, it does work.
Is it better to do this in an investment or tfsa account?
does this still work? I am trying in my paper account with no luck. only the canadian holdings show with out the US sale.
I thought rbc doesn't charge any conversion fee, so why u need to do that? Please correct me if I am wrong.
@P Dhar - RBC charges conversion fees (you won't see a charge on your statement, but you will receive less USD for your CAD).
Just did this, thanks for the great video. How many hours or days before the short is cleared and there are no negative balances on the US DLR short position ?
@dropd4 thewin: The account normally gets cleaned up in the next 5 business days. Keep an eye on your account though, as RBC may try to charge you debit interest if they're late processing the journal (just call them to reimburse you if they charge you debit interest).
Great video, thinking of going VOO for my RRSP this is what I was looking for
@1206 - Glad it was helpful! :)
Should I let some money to pay the commission in CAD and USD?
I want to convert USD to CAD.
i.e.
1- transfer 100$ USD
2- BUY DLR.U for 90$ USD (9 @ 10$/unit) (10$ left for commission)
3- SELL 9 DLR @ 13$ CAD = 117$
4- Cash in 107$ CAD (117$ CAD -10$ CAD)?
don't do NB for such a small amount. itll cost you around $23 cad and exchange is usually 1.5-2.5%. This is only worth it if the your banks asking price is higher than the cost of purchasing shares, which is 9.95 in each currency. check by looking up cad to usd exchange on google, then go on transfer funds on your bank account, and click calculate exchange. subtract the bank quote from the google amount. if it's more than $9.95 CAD + $9.95 USD, use NB. Your terms of use will tell you how much the conversion costs thru your bank. this means if ur bank asks for 2.5%, you lost $2.5 cad to convert $100 cad to usd
Thanks Justin! If I already have some USD cash in my account, will this affect the purchase of the USA ETF at all?
@Sue-Lee Pring: If you already have actual USD cash in your account, you could include this amount when purchasing your US ETF (if you want to purchase more of it). RBC misleads investors in the trading screen - they take your CAD cash and display it in US dollars when you are trading in your USD account. Please ensure that this is not the case - you may have less US dollars than you think).
DIY Investing with Justin Bender thx Justin!
I completed this last week (except it was USD to CAD) and the trades settled a few days later, but my investments state I have a large negative investment & market value in CAD and still have positive in USD.
Is that normal?
@Thundaga - I would call RBC to complete the journal process, and to also ensure they do not charge you any debit interest.
Were you able to resolve it?
Hi Justin, I just followed your steps for a large conversion from CAN to USD. After everything has settled I'm now wanting to transfer the funds to my RBC US Currency account, but I'm being prompted for a 30% withholding. I really hope this isn't the case, as I'm about to purchase RE in the US. Here are my options when trying to make the transfer
Withdrawal type Gross (before withholding tax) Required information | Net (after withholding tax) Required information
Is there a phone # where I can call you at?
Thank you.
That's the first I've heard of that (is it a margin account?). Out of curiousity, roughly how much was the conversion and have you figured everything out now?
If you've done the conversion from your RRSP account then it would. If you take money from your RRSP account (aside from some exception), you will be hit by a withholding tax.
I’m a bit confused as to why this is necessary with RBC. I thought converting your funds from the Canadian Tfsa account to the USD Tfsa account is free... what would I be saving?
RBC will charge roughly 1.5% o 2% in hidden fees for the currency exchange. I did this last month with $25k CAD and was charged roughly $400 in fees for this. I'll be doing this Norbits Gambit today and have worked out it will cost me $20 in trading comission and then another $40 in the difference in price between the bid/ask on DLR
@@pacmancalgary thanks for the answer! Where do you go to see how much they’ve charged for the currency exchange? It seems they’ve hid the fees REALLY well
@@jingyaliu696 You would need to look at the post rate and then see what rate they give you when you do the exchange. There is usually a 1.5 %- 2% spread where they make their cut. I suppose this would only make sense to do depending on the amount you want exchanged. Keep in mind using this procedure is going to have at least $20 in commission fees for trading plus the difference between the bid/ask price when you buy and sell. I'm not sure what the dollar threshold amount it for this to make sense vs just transferring it and paying the hidden FX fees the bank charges.
@@pacmancalgary okay I finally got it, thanks so much for your explanation!
assuming this goes through in market hrs, should i wait for the settlement or can/should i immediately sell dlr.u when the market opens (and dlr is bought)? i'm worried about the interest that may come from selling shares i "don't have"
@Jen McConnell - At RBC Direct Investing, you can immediately buy and sell DLR and DLR.U on the same trading day (you don't need to wait for settlement). To ensure RBC does not charge you debit interest, I would recommend calling them on the settlement date to ensure they process the journal of DLR shares to the USD account that day (to offset the debit position).
@@JustinBenderCPM Thank you, I noticed you advised of this in other comments. Sorry about the redundancy and I appreciate your information :)
@Jen McConnell - No worries at all! :)
very helpful, wish I watched this 2 years ago
Great video, thanks for sharing its very helpful!!
Hi Justin, does this work with an rbc practice account? doesn't seem to work for me
Russell DJ - unfortunately, Norbert’s gambit does not work in an RBC practice account.
@@JustinBenderCPM That finally answers my question! UGHHH. In that case, would a Cash or Margin account be better...? I intend to hold some stocks long and also short some in 7 day cycles or so (I'm not sure what tax implications a cash vs margin would have)
Why would you want to practice converting money into USD? Norberts Gambit is only necessary when it's real $$$ and you're trying to save on fees.
@@ro0t14 To make sure it works flawlessly before opening a real account and using real money! (it's like practicing black jack strategies before gambling your money at the casino)
Although as we unfortunately find out, not all features work on practice accounts!
@@genkikai9992 If you're new to trading (and it sounds like you are), I suggest sticking with Canadian listed Stocks and ETFs. Just buy a Canadian ETF that holds the US stocks and save yourself the complexities of currency conversion. If you must trade US listed ETF's, I suggest you do it in a tax sheltered account (RSP or TFSA) so you don't have to worry about the tax implications of your trades (which can get complex).
As far as implications on cash vs margin account, both accounts will function identically in terms of Norberts Gambit. A Margin account just means you can borrow against the stocks you hold in your account (like a line of credit).
But, the RBC bank page was changed a little
The Bank of Canada exchange rate is 1.2489% for U.S. to Can. $. Royal Bank's exchange rate is 1.209%. That's over 3%. (April 24, 2021). So Royal could charge people $3200 to exchange $100,000 U.S. dollars. Or you could pay $20 in trade fees. Let's erect a statue to Sir Norbert for his noble quest to stick it to the bankers.
I tried this on Friday at around 1:00pm. It took a while for the DLR shares to get filled. Then when I sold the shares from DLR.U they were half filled before the trading day ended and the order ended up not getting filled.
I am wondering why it took so long to fill the order. It was RBC Direct investing.
@killerkurt - You'll need to speak with RBC Direct Investing.
@@JustinBenderCPM Thanks. Yeah I called them. I got it sorted out and turned my CAD to USD with the method you described in the video.
How long is "shortly after"? 3:05
Does this work the same way with Scotia iTrade?
@Aaron K: Unfortunately, Scotia iTRADE does not allow Norbert's gambit in their RRSP accounts (you can convert CAD to USD in their non-registered accounts though).
HiJUstin, by buying DLR, I will be charge 10$ commission, right? and by selling DLR.U I also be charge 10$ commission. that cost me 20$ to exchange
@Melchor Lim: You are correct - at RBC Direct Investing, the commissions are about $10 per trade (so try to make your currency conversions count ;)
So in your online banking, you can open an account called "RBC U.S. High Interest eSavingsTM,." This account will let you exchange your cnd$ to us$ for a small fee before sending the money over to direst investing. It would be a better option if your working with less than $1200 cnd (based on my results). But if your working with more than that, than Justine's method looks very promising!
Is there any short term trading fee for the DLR etf?
@zju7135 - Nope! :)
What do u do when u placa a buy limit order and it only gets partly filled? And now the other half is sitting there not getting filled?
@Brad Sopkow - You should be able to request an adjustment to the limit price in the "Place an Order > Check My Orders" section of the website.
Can I use it in my personal banking account instead of the investing account?
I think you would need a margin account, otherwise you'll be withdrawing from your RRSP or TFSA and face tax implications.
How long does this take?
Why not wait 3 days before selling DLR.U instead of shorting it?
@Bon Jour: You need to sell DLR.U before you can purchase your US-listed securities (so you would not have any stock market exposure during this waiting period (just US dollar exposure via DLR).
This is a great video, but it is time to update it with new RBC Platform
Are we allowed to sell a Part Filled Order? For some reason, my DLR Buy got split into 3 groupings...
Tamerlane same thing happening here, but mine got split into 2. what happened to yours?
@@raknar427
Even though it says Part Filled, it could actually have been filled an hour or two later, without the status actually getting updated. So I was able to sell without any issue in the end.
@@QuickdrawMcGraw360 You're being charged for each part separately with 9.95. Figure out best price on the market and make sure it's still worth it if parts are filled. also, don't sell odd lots if you can help it
You can also click "all or nothing" so that only the entire amount is sold or bought
Thanks a bunch for the tutorial, I was planning to use the RBC platform to perform a Norbert Gambit and I was wondering about the specifics of the platform itself.
Out of curiousity, why do a limit buy/sell as opposed to a market sale? Since you are setting your limit to current market, wouldn't not work with a market buy/sell?
@Alain Bourgault: A market order works as well, but if there is a strange price discrepancy mid-trade (i.e. the price of the share doubles for no reason at all), you'll be stuck paying the higher price. Although it doesn't happen often, the results could be devastating.
The limit order eliminates this market order risk.
@@JustinBenderCPM Makes sense, thanks for the clarification.
Can the reverse be done, buy DLR.U/sell DLR, to convert usd to cad?
@dmespolet: It sure can! Just buy DLR.U with your US dollars on the US dollar side of your account, and sell DLR on the Canadian dollar side of your account (both securities trade on the Canadian stock market).
Thank you.
AJ Hubbell: You're very welcome! Good luck with your FX conversions :)
Thank you, Justin!
excellent amazing I love it
Can we use TFSA instead of RRSP?
@Adil-e-Rawan Ahmed - You certainly can!
hi Justin, some other youtubesr in the similar vedio meertioned that after we purchase DLR in cad account, we need to call rbc to journal over( which is put the dlr in the cad account side to us account side), do we need to call for journal over ?
i treid once with your technology and it seems work but i dont know if there is anything missing that lead to other cost?
@Rachel Huang PREC* - It's best to call RBC DI on the settlement date to request the journal, as they are sometimes late with processing (which can create a debit interest charge in your account), in which case, you'll need to call them anyways to reimburse the charge.
And when I call the rbc to journal over. The eft already decrease by 60( I think 0.2% What should I do ? Should I journal over first and wait till it increase back to the price I bought then sell it.
@@rachelhuangprec6907 - To convert CAD to USD, you need to buy DLR on the CAD side of your account on the Canadian market and immediately sell DLR.U on the USD side of your account on the Canadian market (same day).
To avoid possible debit charges, call RBC DI on the settlement date (trade date + 2 business days) first thing in the morning and ask them to journal your shares of DLR from the CAD side of the account to the USD side of your account.
@@JustinBenderCPM so i can buy and sell first , then call rbc to journal over ? what if i just buy and sell without calling them.
@@JustinBenderCPM so made two transaction, 1st one: i follow your instruction and bought dlr at 12.83 and sell at 10.09,(i convert 32084.95 cads to 25215.05 us ) the exchange rate is 1.27245. i do not call rbc to journal over. i purchased us stock direcly.
2nd one: i bought XXX share of dlr at 12.92 and i called to journal over, and want to sell at 10.09 this morning, in the rbc activities , it shows they put it in us side already but the amount is XXX less 173.95us dollars . if i sell it at 10.09 now, it shows that i will have XXXX us, the exchange rate will be 1.2864. however, the RBC direct investing current exchange rate is only 1.27245.
3:16 how soon will RBC offset the position and clear up my account anyway? It has been 3 business days and my account still showing +DLR and -DLR.U being there and kicking.
@AthenaCannon - I would make a habit of calling RBC DI first thing on the settlement date and requesting the journal (as they sometimes forget).
@@JustinBenderCPM Hello Justin thank you for replying. It is not possible to call RBC DI these days due to the current WSB market in Feb 2021. There are no agents pick up the call and my 10 attempts all resulted in RBC hanging up on me.
However, RBC did clear out my +DLR and -DLR positions today, it’s the 4th business day since I did the Norbert Gambit. The problem is it looks like they applied the CAD/USD forex rate of today, and not the forex rate from 4 days ago when I placed the order. At 4 days ago, CAD/USD was higher than today’s. As the result, when I exchanged 25,000 CAD, RBC made me pay a differential of 80 CAD! It is quite BS to me.
@@AthenaCannon - If you bought and sold your DLR/DLR.U pair on the same day (which is possible at RBC DI), you would have locked in the FX rate at that time. So you may just be misinterpreting the account details (which is easy to do).
@@JustinBenderCPM The settlement date for my first transfer is tomorrow, and I'm unsure if I should call RBC DI to ensure that they journal - do you think it's worth it just in case they don't, or is it better to wait and see?
Thanks
@@SCtester - I would recommend calling RBC DI on the settlement date (please note that the settement date for DLR/DLR.U is now T+1).
I tried to use the Norbert's Gambit to convert $1507 CAD to USD, but it was $3 more in contrast to using RBC DI exchange rate page. I was just wondering why I wasn't able to save money using Norbert's Gambit. 😔
@The Awasa: Norbert's gambit is generally only cheaper for amounts of ~$3,000 CAD and above (due to the cost of the two extra trading commissions at most brokerages).
To calculate your specific savings prior to placing your trades, follow these steps (I've used a hypothetical $25,000 CAD as the conversion amount):
- Take the amount you're converting: $25,000 CAD
- Subtract the trading commission to buy DLR: $25,000 CAD - $9.95 CAD = $24,990.05 CAD
- Divide by the current ask price of DLR: $24,990.05 / $13.18 CAD = 1,896.05842 shares (I understand that you can't buy partial shares, but this is just for an example)
- Multiply # of shares by the current bid price of DLR.U: 1,896.05842 shares x $10.03 USD = $19,017.47 USD
- Subtract the trading commission to sell DLR.U: $19,017.47 USD - $9.95 USD = $19,007.52 USD
Next, call your brokerage and ask them how many US dollars they will give you for $25,000 CAD. Whatever the difference is, that's your savings. You need to go through this process whenever you want to determine your savings using Norbert's gambit (there's no general rule of thumb).
@@JustinBenderCPM Thank you so much for the quick response. It makes sense with $9.95 commission fees. For next time, I will keep in mind to use it for converting more than $3k.
Don't forget when selling the DlR.U, the commission fee is in USD, so if we're conservative and say $10 USD = $15 CAD, your effective CAD amount to transfer is whatever you have, less $25, and also subtract 0.2-0.3% to take into account the bid/ask spread.
On a $1507 amount, that's (1507-25)*0.998 = $1479.03 effective CAD to transfer to USD
At today's rate, the $1482.05 effective CAD would net you $1114.61 USD
With the standard RBC transfer, you would lose 1.5% which would just be $1507 CAD * .985 = $1484.39 effective CAD which would net you $1118.67 USD.
TL:DR:
Norbert's Gambit 0.2% spread: $1114.61 USD
RBC's 1.5% exchange: $1118.67 USD
Verdict: Reversing the math, to equal RBC's 1.5% rate, you would need to change about $1920 CAD to USD to break even and eventually turn a profit using Norbert's Gambit. (Not taking into account tax implications from capital gains/losses and that stuff)
P.s. currently looking into transferwise, I heard they're a cheap option as well
@@JustinBenderCPM1:28
@@JustinBenderCPM1:28
Can this be done in reverse USD to CAD and also is it only DLR, other stocks which have usd and cad options work as well?
@P M - It can be done in reverse, and you can also use inter-listed stocks instead of DLR/DLR.U (although this can be a bit intimidating for the average DIY investor)
@@JustinBenderCPM For example i googled interlisted stocks, BMO is an option can i use that on RBC direct investing, i read somewhere they banned norberts gambit?
@@PM-dz3fk - Any inter-listed stocks (like BMO) will work (just use caution, as you will be exposed to BMO stock until you place the offsetting sale). This is why I recommend using DLR/DLR.U instead.
Norbert's gambit still works at RBC DI (we just processed a gambit there last week).
@@JustinBenderCPM DLR.U doesnt seem to exist i was trying it, being exposed to BMO ? wouldnt i be exposed to DLR as well, sorry i need a bit of educating here. i was thinking of buying shopify in CAD and selliing it off in USD , ( this is similar isnt it)?
@@PM-dz3fk - DLR or DLR.U just hold U.S. dollars, so you would be exposed to the U.S. dollar for a short period of time (BMO is an individual stock, so it can fluctuate in price arguably quicker than DLR or DLR.U). DLR.U does exist (on the Canadian stock exchange - please watch the video again carefully step-by-step). As you are having some issues, I would recommend trying it out with a smaller amount first to get the hang of it (like $100).
SHOP would work as well. Any interlisted stock would work.
I just tried this but unfortunately my order to sell DLR.U was rejected. I also saw an additional message telling me the security that I was trying to sell in USD. I called RBC earlier and they told me that the account holds both USD and CAD so there shouldn't have been any issues. That would be great to hear if anyone has any ideas on why my trade was rejected. thanks for the video by the way.
@delphinium21 - Are you testing it out in a practice account? If so, it won't work.
@@JustinBenderCPM I tried it in my TFSA account. I don't have a practice account. I bought DLR but was unable to sell DLR.U as my trade was rejected. Things may have changed which is possible. Thanks!
@@delphinium21 - It should have worked. Did you sell DLR.U on the "Canadian" stock market on the "U.S. dollar" side of your TFSA? Did you use a limit order exactly on the bid price (and ensure that it filled before the end of the day)?
@@JustinBenderCPM Thanks. I did pick the Canadian market but USD TFSA side could be the issue. I called them in advance to make sure that it accepts USD they said yes, the accounts hold both currencies but that could be the issue then. Next week I will try on the non-registered account which I know can handle both currencies for sure. I will keep you posted. Thanks again!
@@delphinium21 - Good luck! Please keep us posted :)
Awesome!
Thanks!
what are the implications, warnings ? legal, tax, risk?
if when converting , it realizes gains/loss is it considered the same way as a stock capital gain and loss, hence the tax implication?
when using the converted cash, and there as some problems what will happen? can you tell me the warnings and details?
I wish i knew this...i got charged about $400 just to conver 10k. I called rbc prior but the agent wasn't knowledgeable at all and kept telling me i wouldnt be charged for a conversion fee which was bull. $400 down the drain :(
It should not charge you as fee . They have a rate for you to do the conversion which is much lower than the market FX rate. I already lost a lot
hmm, i tried this in my rbc practise account, but it didn't show either in the my portfolio, though i did do this on the weekend after hours. Is that why it didn't show up, cause it was the practise account? How long does it take for both transactions to settle so that I get my money and can invest it right away?
@Invest boring but stable: Correct - Norbert's gambit doesn't work in RBC practice accounts. If you're buying stocks/ETFs with the proceeds from the gambit, you can generally purchase them on the same day as the other trades (unless there's a Canadian holiday during the settlement period, in which cash you'll need to wait an extra trading day to buy the U.S. stocks/ETFs.
Still works April 2022!
@ioan6211 - Thanks for confirming! 😀
@@JustinBenderCPM thank you for making me save 378$!!
I made a practice RBC account to do this. The order gets rejected each time and RBC says
"
We were unable to process this order as there were insufficient holdings in your account. Please verify your account holdings before resubmitting this order."
Does this work anymore
EDIT: NVM I guess it doesn't work on practice accounts
Bob Smith - You’re correct - it doesn’t work in practice accounts at RBC (but still works in real accounts)
@@JustinBenderCPM Thanks, I loved your tutorial. But maybe you could add a button/notification in the video that says it doesn't work in the practice, since I bet a lot of us spent a chunk of time playing with it before realizing it doesnt work
@Bob Smith: That's a good suggestion - I'll see if my team can include a notification to the video.
can this be done with any dual listed stocks?
I believe so
btw, have u tried this method recently? this video was posted 2 years ago. Is it still working?
I really don’t recommend this..... My order was only partially filled because of limit price but RBC still take $10 fee.
ゆいれい - It's not the Norbert's gambit process that was the issue. It was your inexperience with placing limit orders and adjusting them until they are completely filled.
@@JustinBenderCPM How do I do that?, please help.
Sorry, what's the benefit of doing this? Is it to save money on constrain fees? If I have RRSP in US dollars and RRSP in Canadian dollars, why wouldn't I just transfer US to Canadian in my RRSP account.
Man I could have saved thousands over the last few years doing this, oh well lol.