Norbert’s Gambit Using Questrade: Lower Your FX Fees (2024)

International exposure and diversification – That’s why many Canadian investors seek US stocks. Others just think that having some powerful growth-oriented US stocks mast fast-track their portfolio’s maturity. 

Whatever the reason, there is one major hitch in buying US stocks from Canada: the high cost of US to CAD conversion fees, generally ranging from 1.5% – 2.5%.

And that’s what Norbert’s Gambit (or Norbert’s Gambit Questrade conversion trick) is all about: A simple way to bypass those currency conversion fees, also known as foreign exchange fees.

It helps a lot of US and Canadian investors, and I’ve put this guide together to help you understand it.

What is Norbert’s Gambit?

Norbert’s Gambit – It might not be as cool as the gambits in chess, but it’s just as effective when you are trying to buy equity from across the border. 

Norbert’s Gambit lets you bypass currency conversion fees when buying US stocks from Canada (and vice versa) by buying cross-listed stocks/ETFs (that trade on both TSX and NYSE), converting the exchange (for no fee), and selling them for USD. It takes three to four days and carries minimal trading fees.

Exposure to the US stock market is not just smart from a diversification perspective, but it also offers much more than that.

Combined, NYSE and NASDAQ offer access to about 5,700 companies, which is nearly double the number of companies you have access to in Canada (3,100 companies on TSX and TSX venture capital exchange).

As the world’s largest economy, it also offers many things that the Canadian market doesn’t: Access to over 30 dividends kings (with a dividend growth streak of over 50 years), tech giants like Amazon and Apple, and more tech IPOs. There are plenty of other reasons to invest in US stocks, but it comes with a catch.

Why Should You Use Norbert’s Gambit?

When you buy US stocks from a Canadian brokerage account like Wealthsimple Trade or Questrade, you need to pay a currency conversion fee. It’s somewhere between 1.5% and 2% for Questrade and 1.5% for Wealthsimple Trade. So if you are investing $1,000, you would pay $15 to $20 in conversion fees alone. 

Thankfully, there is a simple way around it: Norbert’s Gambit. Norbert’s Gambit lets you bypass currency conversion fees when buying US stocks from Canada (and vice versa) by buying cross-listed stocks/ETFs (that trade on both TSX and NYSE), converting the exchange (for no fee), and selling them for USD. It takes three to four days and carries minimal trading fees.

In Canada, you buy the stock or ETF from TSX, start the process of converting it to its US counterpart, and then wait. Converting a cross-listed or dual-listed stock/ETF between exchanges is called journaling, and it carries no fees. 

But it does take time: Between three to four days. Similarly, buying and selling the ETF you would use for Norbert’s Gambit might also carry a small fee. So it’s only effective when the cost of buying US equity by paying the conversion fee is significantly higher than executing Norbert’s Gambit, and you can afford to wait three to four days.

There is also the matter of the value of the US dollar changing against the Canadian dollar when the stock/ETF is being converted from TSX to NYSE, which can be in your favour or against you, but there is a way to get around that as well.

What Would You Need For Doing Norbert’s Gambit?

You will need:

  • A funded Questrade account.
  • A device to execute trades (phone or a computer).
  • The name of the cross-exchange stock/ETF you will need to execute Norbert’s Gambit (We will use DLR.TO).

Step-By-Step Instructions

Norbert’s Gambit Using Questrade infographic

You can execute Norbert’s Gambit on any trading account that allows you to journal dual-listed stocks and ETFs. For these instructions, we will use Questrade because it charges a relatively small fee to sell an ETF, and there is no fee for buying one.

Step 1: Find The Right Cross-Exchange Stock or ETF

You can execute Norbert’s Gambit using any dual-listed stock like Suncor and FTS or cross-listed ETFs, but most people choose Horizons US Dollar Currency ETF (Symbol: DLR.TO) for three reasons:

  • It’s cross-listed on NYSE and TSX.
  • It tracks the exchange rate between CAD and USD.
  • Stocks and ETFs with different underlying assets might rise and fall in value during the time it takes to journal them from one exchange to another.

There is a very small ECN (Electronic Communication Network) fee, but it’s inconsequential compared to the conversion fee you might need to pay if you are not following Norbert’s Gambit.

Step 2: Buy The ETF’s CAD Version

On Questrade, you have two versions of the same ETF:

  • DLR.TO (it’s the TSX version of the ETF that is in Canadian Dollars)
  • DLR.U.TO (it’s the NYSE version of the ETF that’s in Canadian dollars).

You have to buy the first one: DLR.TO in your native currency. The steps would be the same if you were buying any other ETF: Verifying the adequate amount of cash and calculating how many stocks you can buy (or want to buy). Since it will already take a few days to journal over, change the order type to “Market” so that the order is processed immediately.

DLR.TO Info Questrade Norbert's Gambit


Step 3: Request Questrade To Journal Over Your DLR.TO to DLR.U.TO

You can contact Questrade chat support via call or a chat message. In both scenarios, you will need to follow these simple steps:

  • Convey your credentials, so they can identify your account.
  • Inform them of your ETF position (number of units of the ETF and your account, i.e., TFSA, RRSP, non-registered).
  • Request them to journal them to DLR.U.TO.

They usually inform you how many business days it’s going to take, which is usually three to four. It’s important to note that you can only contact them during business hours. There have been some issues due to COVID with wait times though, as you can see with this very long queue here:


Step 4: Confirm Journaling And Sell The Stocks To Get USD

You can check your account after the time frame communicated to you by Questrade Support. You will find an equivalent number of DLR.U.TO units in your Questrade account. You can sell them right away to get the USD in your Questrade account.

Unlike the time you bought the ETF, you will need to pay a commission fee, along with the minimal ECN fee. The commission would depend on the number of shares you are selling, but it would never exceed $9.95. Once you’ve executed the trade, your account will be credited with the appropriate US dollar amount.


Step 5: Buy US Stocks

Now that you have funds in USD, you can buy as many US securities as you can with your funds. You can use Norbert’s Gambit again to get the funds in CAD when you are reaping the profits from your US investments.

Important Things You Need To Know About Norbert’s Gambit

Before you run off to execute your first Norbert’s Gambit and go all out on US securities, there are a few important things you need to consider.

Costs of Norbert’s Gambit

  1. Conversion Fees: Questrade charges $4.95-$9.95 per trade for currency conversion, which is lower than the typical conversion rate charged by most banks and financial institutions. Using Norbert’s Gambit can help save on these conversion fees.
  2. Exchange Fees: These are incurred when using Norbert’s Gambit and vary based on the exchange used and the amount of currency exchanged. These fees are generally lower than those associated with traditional currency exchange methods.
  3. Commission Fees: Charged by brokerages for executing trades. When using Norbert’s Gambit with Questrade, these fees are often minimal and vary based on the type of account and the amount of currency exchanged.

The Cost-Benefit Analysis

Questrade levies a 2% conversion fee when you buy US securities. So if you are investing just $200 in a US stock, you will need to pay a conversion fee of $4. If you use Norbert’s Gambit to get around this fee, you will end up paying a bit over $5 (thanks to the ETF trading fee).

In that scenario, paying the conversion fee is actually better. And the best part is that you get to execute the trade right away.

Norbert’s Gambit isn’t always the ideal option, and you have to run a simple cost-benefit analysis to see which one is the better option. And you also have to factor in the three to four-day delay.

It’s a smart strategy when you are investing heftier sums in US securities (somewhere north of $1,000) because then the savings might be substantial enough to justify the waiting period.

The Cost of Waiting

This would vary from investor to investor and trade to trade, but waiting for three to four business days might completely annul the benefit that the trade offers. An example would be Gamestop.

Between Jan 25th and Jan 27th, the stock grew by over 350%. That’s just three business days. If you wait that long on a hot trade just to bypass the currency conversion fee, you will probably lose a lot more than you’d be able to save.

On the other hand, if you simply want to add a long-term US stock to your portfolio and you are investing a significant sum (say $5,000), using Norbert’s Gambit might shift the needle in your favour. 

If you typically trade or invest in US stocks, the smart idea is to use Norbert’s Gambit to ensure you always have liquidity in USD.

Fixing The Currency “Latency” Issue

There are plenty of dual-listed stocks and ETFs that you can use to execute Norbert’s Gambit, but most of them come with a single problem.

The value of the stock would fluctuate between the time you buy the stock (and place the journaling request) and the time you sell the US version of the stock for USD. If the stock price grows, it’s in your favour. If it dips in that time, it might cost you more than you’d be able to save from Norbert’s Gambit. 

Let’s say you bought a dual-listed stock on Monday. You put in the journaling request immediately, and the stocks were converted to the US version of the stock in the next four days (by Thursday).

If the stock drops drastically enough in those four business days, you might end up with less USD buying power than you would have if you went through the direct conversion route.

You can fix this issue by using the specific Horizons US Dollar Currency ETF, but it’s still subject to change depending on the currency fluctuation. It might be trivial for small sums and relatively harmless for even larger sums, but there is a way to avoid them altogether.

And that involves “shorting” the ETF. You need to:

  • Buy DLR.TO ETF shares.
  • Short DLR.U.TO shares (the same number of shares you bought of the DLR.TO)
  • Put in the journaling request.
  • Once the journaling is done, Questrade will automatically cover your position since you will have the same number of DLR.U.TO shares that you shorted.

The steps might be easy, but the process is not that simple and might not even be a win from a cost-benefit perspective. Here is what’s going on under the hood:

Let’s say you buy 100 DLR.TO shares on Monday and shorted 100 DLR.U.TO at the same time. When you short stocks, you are basically lending them from your brokerage with the promise that when you return them back, the brokerage will pay you the exact SAME PRICE you shorted them for. It will also charge you a fee for lending these stocks to you.

Then you put in the journaling request.

In four business days, your request is processed, and you now have 100 DLR.U.TO stocks, the exact same number that you shorted. The brokerage will cover your short and pay you in USD and not for the spot price for the fourth day, but for the price you shorted the ETF for.

This allows you to stay protected from the price fluctuations that could happen during the days it takes to journal your shares at the added cost of shorting fee.


What are the risks associated with Norbert’s Gambit?

Norbert’s Gambit is generally considered a safe strategy, but there are still some risks involved. The main risk is that the stock price could change between the time you buy and sell the shares, which could lead to losses.

Additionally, there is always a risk of technical errors or delays, which could affect the timing of your trades.

Is Norbert’s Gambit legal in Canada?

Yes, Norbert’s Gambit is legal in Canada. It is a legitimate strategy that is used by many investors to save money on currency conversion fees.

How does Norbert’s Gambit work with ETFs?

Norbert’s Gambit can also be used with ETFs that are listed on both the Canadian and US stock exchanges. The process is similar to using Norbert’s Gambit with individual stocks.

You would buy the ETF on the Canadian stock exchange, convert the currency using a cross-listed security, and then sell the ETF on the US stock exchange. This can help you save money on currency conversion fees and get better exchange rates.

Should You Use Norbert’s Gambit?

If you are planning to trade frequently and in large amounts, then Norbert’s Gambit could be worth the effort. By using this strategy, you can save money on currency conversion fees and get better exchange rates. However, if you are only going to trade occasionally and in small amounts, then the effort may not be worth it.

If you want to give it a try, you can open an account with Questrade and get $50 in free stock trades.

Alternatives to Norbert’s Gambit

While Norbert’s Gambit is a popular method for converting CAD to USD with Questrade, there are alternative methods you can use to avoid currency conversion fees. Here are a few alternatives to consider:

1. Use a USD Account

If you frequently trade in USD, consider opening a USD account with Questrade. This will allow you to hold USD in your account and avoid currency conversion fees altogether. You can then fund your USD account using a bank transfer or by converting CAD to USD using a third-party currency exchange service.

2. Use a Currency Exchange Service

If you want to convert CAD to USD outside of your brokerage account, you can use a third-party currency exchange service, such as Wise. These services typically offer better exchange rates than banks and charge lower fees. Just be sure to research the service and read reviews before using it.


What is Norbert’s Gambit

Norbert’s Gambit is an excellent strategy for investors who want to buy US securities without paying hefty conversion fees.

I hope this guide equipped you with the guidelines and the important information regarding Norbert’s Gambit that would allow you to make an informed choice, i.e., when to execute this strategy and when to pay the typical conversion fee. 

It’s always prudent to run a cost-benefit analysis before using Norbert’s Gambit to buy US stocks because if the strategy that’s designed to save you money ends up costing more, then it defeats the whole purpose. 

Read our full Questrade review here to learn more about what it offers.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Read about how he quit his 6-figure salary career to travel the world here.

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6 thoughts on “Norbert’s Gambit Using Questrade: Lower Your FX Fees (2024)”

  1. No one wants to deal with Questrade anymore because their customer service has massively gone down hill in the past 3 years. It would be great to list other brokerages who may facilitate this function for us. Does Weathsimple now, 2 years later?

  2. Won’t this only work if the brokerage allows you to hold US currency or aUSD account? Otherwise, wouldn’t Wealthsimple, for example (no USD accounts) immediately convert the sale of a USD security into CDN currency and take their currency conversion fee? So you would avoid the currency conversion fee only on the purchase? The DLR gambit to move USD would not work in this instance.


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