Dual-listed stocks for gambit trades
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Thread: Dual-listed stocks for gambit trades

  1. #1
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    Dual-listed stocks for gambit trades

    I started another ShoGam today. I used MFC (Manulife) for the first time. It seems very liquid both in US and Canada, one penny spread in each, and good for small gambits with the lower share price near $20. No problem with my odd lot order.

    I converted about 7 K and the gambit still saved me about $130 in fees vs using TDDI's currency conversion.

    So far I have used carrier stocks RY, TD, BNS, MFC. I might also use SU in the future. What other carriers do people use?

    Last edited by james4beach; 2017-06-17 at 12:41 AM.

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    Dual-listed stocks for gambit trades

    What carrier stocks do people use for currency gambit trades? Assuming we're talking about traditional gambits, not the DLR/DLR.U method. It's good to have a list of them to use, since you want to avoid stocks you already have positions in, and will try to align the trade size to the amount of cash you're converting. I consider various things:

    - want board lot (100 share multiple) orders for best fills and best efficiency
    - need high liquidity and $0.01 bid/ask spreads
    - higher share prices are better since $0.01 spread is smaller % of total
    - want low volatility, a stock that isn't moving much on the gambit day

    Here are some dual listed stocks I use for gambits, with high share prices:

    RY
    TD
    CM
    CNR/CNI

    I don't like the other big bank stocks since US liquidity isn't great (BNS is border-line). Any others that you use?

  3. #3
    Senior Member humble_pie's Avatar
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    Quote Originally Posted by james4beach View Post
    I started another ShoGam today. I used MFC (Manulife) for the first time. It seems very liquid both in US and Canada, one penny spread in each, and good for small gambits with the lower share price near $20. No problem with my odd lot order.

    I converted about 7 K and the gambit still saved me about $130 in fees vs using TDDI's currency conversion.

    So far I have used carrier stocks RY, TD, BNS, MFC. I might also use SU in the future. What other carriers do people use?


    i used MFC once. For the reasons you mention above. It's less expensive than the banks, therefore easier to calibrate down to the dollar (i wouldn't be one to try an odd lot when gambitting though)

    elsewhere you're asking for more gambit carrier suggestions but i'm wondering why? to my way of thinking it's more efficient to only have one or at the most 2 candidates. One can get to know them, their quirks, habits, earnings announement dates, etc. This knowledge is helpful.

    it's my understanding that folks who don't have USD paycheques or a USD business only need to gambit every little once in a while. Once a reasonable inventory of US investments has built up, their dividends will continue to swell the USD account all by themselves.

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    I prefer to use stocks that also pay dividends in USD. BEP.UN and BIP.UN are two.
    Hidden Content - Working on a $1 million portfolio and $30k per year from it.

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    Senior Member humble_pie's Avatar
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    Quote Originally Posted by My Own Advisor View Post
    I prefer to use stocks that also pay dividends in USD. BEP.UN and BIP.UN are two.


    i hesitate to intervene here but this is at least the 2nd or 3rd time that MOA has posted how wonderful are brookfield's BEP & BIP for gambit trading, when in fact nothing could be further from the truth imho.

    currency arbitrage - which is what gambit trading is - is a tricky concept for a newcomer to master. There's no room for mistakes, everything has to be correct from the getgo.

    so it's for the novice gambit trader that i'll post - one more time - that illiquid stocks like BEP dot UN & BIP dot UN are to be avoided like the plague. Do not use these stocks unless you hold them already & have some sort of misguided fancy for trying to day trade them.

    what the gambit trader needs as a gambit carrier stock is a big multinational with high volume in toronto & at least moderate volume on new york markets. He needs tight spreads in both markets. Your gambit trader needs to be able to snap up his quantity in toronto or new york at a fair price & then, quick as a wink, he needs to be able to sell that same quantity on new york or toronto, again at a fair price.

    liquid interlisted stocks like royal bank or MFC, which is jas4's latest pick, present the optimal conditions & the best opportunities for currency arbitrage.


    lastly, there is a reference to BEP's & BIP's USD dividend, but this is a horse of a different colour. Currency of dividend has nothing to do with potential success in arbitrage trading. An interlisted canadian company could pay no dividend whatsoever; or it could pay its dividend in little slices of green cheese from the moon; but as long as its public market trading patterns in both toronto & new york showed good liquidity with tight bid/ask spreads, this company would be a first-rate gambit candidate.

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    Senior Member tygrus's Avatar
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    Thanks, ENB and TRP look suitable.

    I agree with humble_pie and the stocks must be liquid. Maybe MoA is thinking of a different kind of operation?

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    I think MFC is fine but also I noticed the downside of the low share price. Just a one cent shift is significant as % of total.

    The reason I was looking for a long list of carriers is then I can match up the amount of money to convert against which one gives the right number in board lots.

  10. #9
    Senior Member tygrus's Avatar
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    James, the bots and algos were designed for this very purpose. Do you really think you can beat them at their own HFT game? Trying to expose a gap that closes in mere minutes, maybe less. This is dangerous IMHO.

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    I'm not talking about exploiting a gap, but rather about trying to get as close as possible to ideal conversion. Assuming even a stationary stock that is perfectly priced cross-border, you lose on the bid/ask spread. Imagine two different gambit carrier stocks:

    AAA has 9.99 bid, 10.00 ask
    ZZZ has 99.99 bid, 100.00 ask

    In a gambit operation you are hitting the bid at one side and ask on the other. It's an inevitable loss during the gambit. With AAA, the slippage (loss) is 0.01/10 = 0.10% but with ZZZ, the slippage is 0.01/100 = 0.01%

    That's a big difference in a gambit, 10 basis point inefficiency with AAA but only 1 basis point inefficiency with ZZZ. This is why higher share price carriers are better.

    Maybe I'm splitting hairs here, but I've been able to do gambits for as cheap as overall fees of 7 basis points. That means that say a 10 basis point slippage using AAA is unacceptable. Once we're down to these ultra low forex fees, it matters how many basis points slippage comes from bid/ask spread. The best carrier is highly liquid, one cent bid/ask spreads, and high share price.

    Last edited by james4beach; 2017-06-18 at 05:12 PM.

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