Investing Stocks Advanced

Norbert’s Gambit Explained: Avoid 1.5% Currency Conversion Fees

Sam
2 min read
Norbert’s Gambit Explained: Avoid 1.5% Currency Conversion Fees

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In This Article

  1. How Norbert's Gambit Works
  2. Step-by-Step at Questrade
  3. Which Brokers Support It?
  4. When Is It Worth It?
  5. Frequently Asked Questions
  6. What is Norbert's Gambit?
  7. How much does Norbert's Gambit cost?
  8. How long does Norbert's Gambit take?
  9. Is Norbert's Gambit legal?

Norbert’s Gambit is a currency conversion technique that allows Canadians to convert CAD to USD at near the spot rate — saving 1.5–2% compared to what most banks and brokerages charge. If you invest $20,000 CAD per year in US stocks, this strategy can save you over $35,000 in fees over 30 years.

How Norbert’s Gambit Works

The strategy uses the Horizons US Dollar Currency ETF, which is listed on the TSX in both currencies: DLR (CAD) and DLR.U (USD). You buy DLR with CAD, journal the shares to your USD account as DLR.U, then sell DLR.U for USD. Total cost: approximately 0.05–0.15%.

Step-by-Step at Questrade

  1. Buy DLR using your CAD balance (ETF purchase = free at Questrade)
  2. Wait 2 business days for settlement (T+2)
  3. Journal shares from CAD account to USD account via Account Management > Journal
  4. Wait 1 business day for the journal to process
  5. Sell DLR.U in your USD account — receive USD ($4.95 commission)
  6. Buy US stocks with your USD balance

Which Brokers Support It?

Questrade: Online journaling, free ETF buy, $4.95 sell. Best overall.

TD Direct: Phone call required to journal. $9.99 per trade.

RBC Direct: Phone call required. $9.95 per trade.

Interactive Brokers: Direct forex conversion is even cheaper (0.002%).

Wealthsimple: Not supported — no USD accounts or journal function.

When Is It Worth It?

Norbert’s Gambit makes sense when converting $5,000+ CAD at once. Below that amount, the time investment (3–5 business days) is not worth the small dollar savings. For frequent small US trades, Wealthsimple Plus ($10/month, zero FX) is more convenient.

Frequently Asked Questions

What is Norbert’s Gambit?

A technique to convert CAD to USD cheaply using a dual-listed ETF (DLR/DLR.U). Buy DLR in CAD, journal to USD account as DLR.U, sell for USD at near-spot rates.

How much does Norbert’s Gambit cost?

Typically 0.05–0.15% total: buy commission + sell commission + ETF spread. At Questrade, roughly $5–$15 per $10,000 converted.

How long does Norbert’s Gambit take?

3–5 business days total: 2 days for DLR settlement, 1 day for journal, 2 days for DLR.U settlement after sale.

Yes, completely legal. It is simply buying and selling ETF shares — standard brokerage transactions. The CRA does not consider it tax avoidance.

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