# Scrappy gambit and scrappy reverse gambit (SRG)



## james4beach (Nov 15, 2012)

I'm going to test out this method that humble_pie brainstormed. This is an experimental method and I'm going to first try it with a small amount. Background is in this thread and thanks to humble_pie for coming up with this idea
http://canadianmoneyforum.com/showt...unt-brokerages?p=872641&viewfull=1#post872641

Stay tuned! I'll try SRG tomorrow morning at TDDI, assuming the USD/CAD exchange rate is still as wonderful as it looks right now.


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## avrex (Nov 14, 2010)

I'm very interested in how this goes. 
Thanks for trying this.
Keep us posted.


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## humble_pie (Jun 7, 2009)

miscellaneous hints ...

some of the resource persons (ie the supervisors) at one of the TD call centres are rabidly anti-gambit. Not all staff at this call centre are as fierce as their supervisors, so a td client reaching one of those staff will likely be ok.

personnel at the other 2 call centres are far more cool.

evidently the big green had some sort of recent management meeting on what-to-do about gambit clients, because some of the licensed reps continue to offer web commish on the sell side while others do not. Evidently management decision was to leave things at the status quo, ie some reps do wash windows while others do not.

this somewhat ambivalent behaviour from a high level is telling me that the big green nobs do understand - god bless em - what the competition is offering.

ie the TD understands that clients could walk their gambit orders & perhaps more over to BMO or royal bank in a heartbeat, where they'd be able to buy on toronto & instantly sell on new york, or else buy on new york & instantly sell on toronto, all with a couple of fast easy online orders. No phone calls, no waiting.


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## james4beach (Nov 15, 2012)

In my case I'm converting USD to CAD in non-registered. I'm following these steps:

1. Buy shares of RY/etc. Account: US margin, Market: US... standard USD purchase
2. Sell RY shares. Account: US (same), Market: Canadian and you'll see CAD proceeds
3. Accept the warnings and place the trade
4. Call TDDI the same day before market close
5. Ask the rep to CFO (change former order) my sell order, from the US to Canadian margin account
6. Once settled, ask them to journal from US margin to Canadian margin

Step 5 was a problem. Now we see why it's called "scrappy" 

td "Once the order settles, you can journal. So just wait for it to settle."
me: "I'd rather CFO now because otherwise foreign exchange will get converted unnecessarily"
td: "Let me get a trader on the line and see if they can help"
(transferred me to a trader)
td: "This is a special gambit trade, we can move sell order to canadian side and journal it"
td: "We have to charge you full commission to move it to Canadian side. It's called Norbert Gambit"
me: "But it's not a Norbert Gambit trade. You charge full commission _when you place the sell order for me_ (broker-assisted trade). Here, I completed both orders myself... I did both trades myself through the web system. I'm just asking you to CFO the account where the sell occurred"
td: "That's not what I understand. Our instructions are to charge full commission on Norbert Gambit trades"
me: "Please check with your manager. I placed two web trades myself and I'm not even asking you to journal the shares now"
td: <gets supervisor>
td supervisor: "You don't realize this actually does create a lot of manual work for us. We have to explain to our compliance dept why we're shorting against the box in an atypical way, we're sitting with an uncovered short and a TD agent does have to manually move shares. So it's a lot of work and that's why we want to charge full commission any time this is done, even if you're entered the two trades yourself... arguably it's more work when you place the sell trade like this"
me: "Fair enough... "
*td supervisor: "But you had the right concept.* You could have placed the SELL order inside your *Cdn short account*, and then simply called us to journal upon settlement. That would only be two web commissions."

OK, so, the steps as written above are a bad idea. The sell side in the opposite margin account makes them freak out. In fact the manager typed out, while on the phone, all the adjustment steps and notes to the compliance dept and I have no question it creates extra work for them. He was very polite and friendly, by the way.

BUT what about this method he told me, where you place the sell side order into the SHORT account? He suggested doing that on future attempts. Does this cause any tax weirdness or can I still simply report the trade as buy & sell the same security (which it is, of course)?


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## humble_pie (Jun 7, 2009)

james4beach said:


> Step 5 was a problem. Now we see why it's called "scrappy"


oh dear. Like i was saying in message #3 just upthread, you must have reached the markham call centre. Unfortunately you reached an anti-gambit licensed rep on the first contact. Then he referred you to one of the jiggy anti-gambit resource managers.




> me: "Please check with your manager. I placed two web trades myself and I'm not even asking you to journal the shares now"


100% accurate observation




> td supervisor: "You don't realize this actually does create a lot of manual work for us. We have to explain to our compliance dept why we're shorting against the box in an atypical way, we're sitting with an uncovered short and a TD agent does have to manually move shares. So it's a lot of work and that's why we want to charge full commission any time this is done, even if you're entered the two trades yourself... arguably it's more work when you place the sell trade like this"


they're not shorting against the box & they're not shorting uncovered, it's the same account, it only requires a simple clerical flip. James your "manager" - who was probably a resource person - wasted 10 times the energy speecifying to you that it would have taken him to send a simple journal request.




> td supervisor: "But you had the right concept. You could have placed the SELL order inside your *Cdn short account*, and then simply called us to journal upon settlement. That would only be two web commissions."


this is more than baloney, it's a dangerous suggestion. The big green has a long history dating back years of fighting bitterly over this very *short first in short account* method that you are describing.

we have a well-known longtime senior member in cmf forum - whom i could identify but i won't - who got into this exact same fight with the TD over this exact same short-first method, way back in 2010 (i have a good memory.)

james, the ignorance of your TD resource "manager" is astounding. Not only is he wrong about shorting against the box - a concept that he obviously does not understand - but he also failed to understand that brokers do *not* want to tie up valuable shortable stock inventories for we who are merely casual short-term currency gambit traders. Brokers need to keep those loan shares at the loan post for true shorting clients. 

i'm so sorry you fell for the "polite and friendly" act, you're usually too smart for that. But i suppose the rogue "manager" has had many arguments by now, so he's learned to polish his act real good.

as for amount of work, a journal is a journal. CFOing your order & journalling your shares is the same work no matter which account. It's baloney to pretend otherwise.

me i'm sticking to my knitting. Many TD sources are telling me that they still execute gambit orders at web commish. I just described your experience to a longtime former PA representative. He's an outstanding representative who has served the TD expertly for well over a decade.

expert rep confirmed that he would have gladly sold your gambit shares at web commish & arranged the journal. He would also have gladly dealt with your new Scrappy gambit, ie he would have CFO's your order in a heartbeat & arranged for the journal after settlement (btw he also confirmed that your Scrappy gambit was *not* shorting against the box.)

what we're seeing is an ugly Nepal-earthquake sized split over currency gambit trading among TD personnel that, imho, should never be happening. It's unpleasant to witness. Because, in all other matters, the big green is doing absolutely great these days.

personally i've believed for some time that it's more efficient to set up a BMO or a roybank account where gambit trading is instant & 100% online. The convenience of never having to phone anyone over a gambit order is marvellous.


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## james4beach (Nov 15, 2012)

I'll have to digest your reply. By the way, until now every TD rep I've tried has always done my sell-side trade at web commission... so I can't say I've had a huge problem, but this is obviously my first run-in with an anti-gambitter.

I understand that using the short account is a bad idea on their part (ties up inventory). But how about for selfish old me? Is it OK for me to do that, or is there some detriment of doing two web trades (buy in margin, then sell short)... is there a downside from my customer perspective?


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## james4beach (Nov 15, 2012)

By the way the bad luck with the gambit was somewhat inevitable. I've had a streak of great luck lately: I won free tickets to a party tonight, I did some FX speculation and won, and my brand new TSX picks are up in a down market... so the bad gambit experience is OK, can't win 'em all


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## GoldStone (Mar 6, 2011)

You can avoid the whole drama by doing the "short first" version of the gambit.

Assuming you want to exchange USD to CAD:

1. Short RY.TO in CDN Margin Short. Important to do this first to avoid shorting against the box.
2. Long RY.NYSE in USD Margin.
3. Call on the settlement date to journal the shares from USD Margin to CDN Margin Short.

No fuss, no muss, no fighting with the reps.


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## humble_pie (Jun 7, 2009)

GoldStone said:


> You can avoid the whole drama by doing the "short first" version of the gambit.
> 
> Assuming you want to exchange USD to CAD:
> 
> ...



no, i just dealt with this technique in previous message. Historically the big green has fought this method like hyenas.

i've explained why. No need to go over. Longtime respected membert of this forum (ie from before goldstone's time here) vividly described a fight over this exact same short-first method in 2010.

many PA reps have described the whys & wherefores of *why* the TD will oppose clients who short first, then phone to journal. Although the website does technically permit part one of the manoeuvre, the TD has repeatedly said that they will never allow clients to continue shorting first, after being warned.

for true cool, zero phone contact, certainly zero struggle, investors with frequent currency exchange needs should simply open accounts at BMO or royal bank. A quiet pair of instant online trades, 60-90 seconds, done.


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## humble_pie (Jun 7, 2009)

james4beach said:


> this is obviously my first run-in with an anti-gambitter


it's true that the TD is divided into 2 fiercely-opposed camps on gambit trading, with a chasm like a Nepal earthquake crater running between them each:

(ps beware the markham resource personnel though)

.



> I understand that using the short account is a bad idea on their part (ties up inventory). But how about for selfish old me? Is it OK for me to do that, or is there some detriment of doing two web trades (buy in margin, then sell short)... is there a downside from my customer perspective?



surely you can see the downside? i mean what can i say, does one have to fly a huge sky banner over portland oregon that shouts THE BIG GREEN WON'T SHORT GAMBITS FIRST ??

i suppose persisting at the TD might have meaning for one who enjoys arguments. Me i solved the problem in my BMO account years ago. Instant. Online. No phone call. Royal bank is good, too, they say.

of course ever since it keeps on happening that the big green offers web commish even when i don't ask ...


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## GoldStone (Mar 6, 2011)

humble_pie said:


> Historically the big green has fought this method like hyenas.


In the past, they lectured me not to do it. That was the extent of their fighting.

The last few times I've done it, they didn't say a peep. In fact, they were eager to help. _You want to journal shares from CDN Margin to USD Margin Short? Yes, sir!_ Polite and efficient.


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## humble_pie (Jun 7, 2009)

^^

sorry i have ever such a wee bit of difficulty believing this story each:

you've done this many times? you never thought to mention your discovery here? how unlike you ...


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## GoldStone (Mar 6, 2011)

I am sure you and I discussed this method before.


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## GoldStone (Mar 6, 2011)

Just in case you still have doubts, here's one example, from the ancient year 2012 

Messages #13 - #17.

http://canadianmoneyforum.com/showthread.php/12454-Help-with-math-TD-Waterhouse-US-RRSP/page2


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## james4beach (Nov 15, 2012)

OK, so as I understand it, GoldStone is suggesting


 USD to CAD: first short shares in the Cdn Short account, then long in US Margin. At settlement, ask them to journal shares from US Margin to CAD Short.
 CAD to USD: first short shares in US Short account, then long in Cdn Margin. Ask them to journal shares from Cdn Margin to US Short acct at settlement.

Looks like there's a debate here with humble_pie saying that TD will oppose this method, GoldStone saying they do permit it. The "supervisor" today suggested I do this method using the Short account but he may be just one side of the internal ideological battle at TD.

humble_pie is saying, I believe, you're either stuck paying the full commission on the sell side or must use another brokerage. Did I capture the points correctly?


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## GoldStone (Mar 6, 2011)

Your description is correct. Note that you need sufficient margin room in order to short.

https://www.td.com/ca/products-serv...ing/investor-education/calculating-margin.jsp

I've done this trade many times. Two or three times this year alone.


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## humble_pie (Jun 7, 2009)

james4beach said:


> humble_pie is saying, I believe, you're either stuck paying the full commission on the sell side or must use another brokerage. Did I capture the points correctly?



no, i never said any such thing.

i said some TD representatives will wash windows, some won't.

you just weren't lucky today. When you heard the first rep refuse you, you should have said Thank-you-but-i-believe-i'm-changing-my-mind-markets-not-going-my-way & hung up. 

then you would have phoned again. Next monday would do fine, so would next tuesday. You'd phone until you hit a licensed rep who does do windows.

hundreds, maybe thousands of people have been doing this. For years now. Same old, same old.

or people can open backup accounts at bmo or roybank. It's not actually "another brokerage," it's either bmo or roybank, they are the only 2 retail discounters whose platforms allow instant online arbitrage.


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## humble_pie (Jun 7, 2009)

GoldStone said:


> I am sure you and I discussed this method before.



no, never each:

the link you have provided nearby leads alas to a different topic, which is FX fees charged by brokers on certain USD dividends.

in this thread, we are posting about currency arbitrage techniques; that is, conversion of larger amounts of principal, by an investor, while by-passing the usual FX fees that would be imposed by a broker.


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## GoldStone (Mar 6, 2011)

You do your best to make every online encounter very memorable :biggrin:

That's why I remembered the exchange from 2012 :biggrin:

Message #15: you claimed that TD -- quote -- _"doesn't allow currency gambitting via short accounts."_

Message #16: I replied that -- quote -- _"I executed the shorting version of the gambit a couple of times a few years back."_

But whatever.......... :hopelessness:


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## humble_pie (Jun 7, 2009)

.
i see now that, buried some 20 messages back in your link thread - which is mostly about FX fees on USD dividends - comes your fleeting admission that in 2012 you'd received a "stern lecture" for shorting a gambit operation.



GoldStone said:


> I executed the shorting version of the gambit a couple of times a few years back. And yes, I recall I got a stern lecture the second time around.



but a "stern lecture" is all that james4 received today.

goldstone, if you've been escaping "stern lectures" or more drastic punishments recently, i submit that (a) you've been very lucky; or (b) TD still has far too many novice representatives who've never heard of gambit trading, let alone the rarer versions; or (c) your personal charm has grown to rival that of movie-star-good-looking mister prime minister himself.

of the three, no doubt it must be (c).

still, JT is more of a sharing kind of guy, wouldn't you say?


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## GoldStone (Mar 6, 2011)

(d) It's a routine journal transaction.

Me: Please journal X shares of RY from account E to account H.
Rep: I can certainly help you with that.

You don't need the charms of Prime Minister Peacock to get this done.


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## humble_pie (Jun 7, 2009)

^^

but you said you were given "a stern lecture" 3 years ago.

TD has a bunch of novice representatives, they're not able to recognize a shorting gambit, they've been trained to be helpful, & surely someone like yourself knows that .:biggrin:

but readers are begged to judge for themselves. Is shorting a currency gambit trade something that all TD reps sweetly, devoutly & devotedly aspire to assist for free?

while executing its inverse - ie a routine gambit sell - is an expensive full-commission operation that some of the reps have chosen to escalate into an ISIL style battle?

it's all a bit too bipolar for me. BMO or roybank are easier solutions. Perhaps the readers could decide among the 3 TD gambit approaches, then keep the forum posted on their adventures, though.


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## GoldStone (Mar 6, 2011)

humble_pie said:


> but you said you were given "a stern lecture" 3 years ago.


Yes. Something has changed in the last couple of years. Perhaps they recognized that it's counterproductive to fight their own clients, especially when two major competitors offer a much smoother gambitting experience.


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## humble_pie (Jun 7, 2009)

GoldStone said:


> Something has changed in the last couple of years. Perhaps they recognized that it's counterproductive to fight their own clients, especially when two major competitors offer a much smoother gambitting experience.



on the contrary, nothing has changed. 

if anything had changed, why would james4beach have been given such a hard time today?

it appears that you personally are either running by sheer luck into a string of docile & naiive representatives, or else you are even more radiantly persuasive than monsieur national pecs himself.

for the rest of us peasants, TD on currency gambit trading is the same confused as always. Some representatives do windows, some don't. In between, there's an uncrossable chasm.

it's possible that you have started a vogue for short-initiated gambit trades. If so, the story of 2010 will likely repeat itself, except on a much faster time scale due to the official short status of the shares that will be involved.

it's more difficult for a broker to have to deliver genuine shortable stock inventories to casual gambit promenaders. Brokers are required to file overnight short reports with the exchanges, for example. With ordinary gambit trades & scrappy gambit trades, brokers are not required to report these as official short positions. But a true short operation has to be included in the official overnight tally, another burden that common sense says every broker would want to avoid.

once again i'm surprised at the ignorance of the "manager" who instructed james4beach to proceed to a short first strategy.


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## GoldStone (Mar 6, 2011)

humble_pie said:


> if anything had changed, why would james4beach have been given such a hard time today?


Because James asked to do something more esoteric than a plain vanilla journal. It's not the same trade.


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## james4beach (Nov 15, 2012)

I think next I will try the short-first method outlined in post 15.

Then I can report a data point (only one sample of course) about whether they give me trouble. I suspect humble_pie is right, that it just depends on what kind of person you reach. She is correct that the easy way is to just abandon and hang up if you reach a prickly pear.


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## GoldStone (Mar 6, 2011)

The method in post 15 is perfectly legal. It's comprised of three ordinary routine transactions:

1. Are you allowed to short shares in a short account? Yes, of course.
2. Are you allowed to long shares that you happen to be short in another account? Yes, of course. The opposite is not true, aka "shorting the box".
3. Are you allowed to journal shares between your accounts? Yes, of course.

When you call to journal the shares (step #3), don't give them more information than they need to know. 

Don't tell them that you are doing a currency gambit.
Don't tell them that you are journalling the shares to cover the short.

That extra information just confuses them and raises unnecessary alarm bells. No, withholding extra background information is not cheating. No, you are not trying to mislead or con them. Again, ever step in the gambit is perfectly legal on its own. If TDDI objects to the combination of the three, it's their problem, not yours. 

Follow this simple script:

Rep: how can I help you today?
You: please take a look at account 123456-E.
Rep: okay, I can see the account. what can I do for you?
You: I bought 200 shares of RY. They settle today.
Rep: yes
You: can you please journal them to account 123456-H?
Rep: certainly
Rep: <writes a request to the back office>
Rep: <reads the request back to you>
You: yes, that's correct

Once the shares land in the target account, the system will automatically flatten the short position. You don't have to ask for this when you talk to a rep.


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## james4beach (Nov 15, 2012)

^ That makes sense to me.

What do you think is the right way to report taxes with this? Previously when I used DLR, there was a difference in buy and sell dates so I reported it as capital gain/loss (typically close to nil).

When using a gambit where buy & sell are performed on the same day, should I still report it on the capital gain/loss listing along with my other stock activities? It will be approximately a capital loss of $20 each time due to 2 x commission. I'm not worried about which exchange or currency the activity happened on, as it's the same security.


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## GoldStone (Mar 6, 2011)

I report it just like any other stock transaction. Sometimes it's a small gain, sometimes it's a small loss. I use Bank of Canada mid-day exchange rate to convert the USD leg of the gambit. 

Don't gambit a stock that you already own in any of your accounts, registered or unregistered.


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## james4beach (Nov 15, 2012)

Thanks GoldStone. That's an important reminder to not gambit an existing holding in _any_ account.


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## humble_pie (Jun 7, 2009)

james how did your scrappy gambit finally settle out?

it seems to me you should have ended up with two $9.99 commissions but no other fees or charges.

you did get a lecture but that should have been free ...


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## james4beach (Nov 15, 2012)

Yes I still ended up with 2 x 9.99. I have not ever paid full commission during any of these experiences (4 gambit trials so far). The part that irritates me is the time wasted on the phone!


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## james4beach (Nov 15, 2012)

Had another conversation with a TD rep. This guy didn't fight me, but seemed overall confused. I phoned to make sure the journal was going to occur upon settlement today.

_him_: Yes the journal is happening, it should be ready. But I don't understand why you are doing this, is it for currency exchange?

_(I sit and think for a moment about what humble_pie and others said to not argue with them, nor tell them more than they need to know, but just give them the journal instruction... but I'm feeling in a particularly argumentative mood tonight and I want to see where this goes)_

_me_: Yes I'm converting the currencies, and it's working great
_him_: I don't think you're supposed to do it this way
_me_: *I'd like to see you try to stop me*
_him_: I'm not trying to argue with you sir! *But you are not supposed to be short and long the same security in different accounts*
_me_: Says who?
_him_: It's a regulation, says you cannot simultaneously be long and short
_me_: Then journal the shares and fix it
_him_: No I mean you should not open two positions like that
_me_: No, you're thinking of shorting against the box. I did not short against the box. I first shorted the security, properly, then I bought the security
_him_: That's an unusual step, we have regulations and rules, they're not my choice
_me_: Explain to me which regulation this does not agree with
_him_: Well ... (evades the question)
_me_: Reality is, you can't stop me from doing this. The short action is legitimate, the long action is legitimate, it's not shorting against the box - so it's happening
_him_: I'm not trying to argue with you sir
_me_: Wouldn't it be easier to just journal the shares instead of trying to lecture me?

With this guy, my goal was to impress on him the point that I am going to do this, repeatedly, and if he wants to talk about it I'm going to give him a hard time. I'm hoping he'll walk away with a bad taste of what happens when you try lecturing a customer.

lol ... a little entertainment for me. I'm getting tired of TDDI representatives though. Presidents Account my butt, you'd think they'd work a bit harder to keep those assets under management.

Obviously I'm wasting my breath though. You guys have the right idea: just avoid these conversations, either hang up on them or evade all nosy questions and get them to focus on the task at hand -- journal the damned shares.


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## james4beach (Nov 15, 2012)

And by the way, this Tuesday experience (above) settles one of the questions between humble_pie and GoldStone:

Yes, they can still lecture you if you "short first"... if you let them catch on to the gambit.

On the other hand, TD has _not prevented_ me from doing any of this. Nor have they ever charged me full commission. These interactions _can_ be expertly avoided by using GoldStone's script. In Tuesday's call I deliberately went looking for trouble... the guy had already entered the journal and I could have just shrugged and said thanks, goodbye.


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## humble_pie (Jun 7, 2009)

james4beach said:


> _him[TD licensed rep]]_: *But you are not supposed to be short and long the same security in different accounts*
> _me_: Says who?
> _him_: It's a regulation, says you cannot simultaneously be long and short
> _me_: Then journal the shares and fix it
> ...




james4 as you know there are at least 3 kinds of gambits that are possible at TD:

1) Regular Gambit: buy shares, phone broker to sell shares in opposite currency, journal shares (no shorting involved) (medium wear-&-tear on the broker),
(arguments over commission to sell);

2) Scrappy Gambit: buy shares, sell shares online out of same account but specify opposite currency market, phone broker same day & request to CFO order to opposite account (no shorting involved) (this method is easiest for the broker),
(2 low online commissions);

3) Short-first Gambit: short shares first in desired currency account, buy shares in native currency account, whenever desirable phone broker to request diagonal cross-currency share journal (shorting is involved) (this method is hardest for the broker),
(2 low online commissions but TD is far more likely to refuse)


obviously, in the above list of 3 gambit strategies, the first 2 do not involve shorting. This is why they are relatively "light" on the broker's back.

however the 3rd - which is the strategy goldstone advised upthread - does involve an official short position, which is why it's the hardest of the 3 on the broker. The broker must deplete its loan post, which it does not want to do, since it prefers to keep its inventory of shortable shares available for true shorting clients.

in addition, brokers are required to report official short positions each night to the exchanges. For all i know brokers might also be required to pay margin fees to the exchanges that carry their aggregate short positions.

so it's understandable that a broker would prefer a gambit strategy that does not trigger true short positions. In the above list, neither regular gambits nor scrappy gambits trigger true short positions.

i've known myself about the Short-first gambit for as long as i've known about regular gambits. I've never discussed short first gambits in cmf forum because i knew that the Short-first would lead to maximum uproar & trouble for the would-be currency gambit trader.

historically, Short-first gambits are the method that the TD has always fought like a tiger. If goldstone has succeeded in very recent years in slipping several of these per year past licensed representatives - as he describes upthread - IMHO this is because TD has many young representatives who simply don't have enough knowledge or experience yet to pick up on what our foxy friend is actually doing.

it's my belief that, once a critical number of these Short-first gambit attempts come to the big green's attention, they will flag accounts & take action to stop these moves.

in closing, james, may i ask you a question. From your quote above, it looks like you attempted a 2nd gambit, perhaps today, in which you shorted first as per goldstone's script. Is that what happened? ie i'm wondering if you first tried a Scrappy gambit, which you described further upthread, & then a day or 2 later you tried a Short-first?


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## GoldStone (Mar 6, 2011)

humble_pie said:


> however the 3rd - which is the strategy goldstone advised upthread - does involve an official short position, which is why it's the hardest of the 3 on the broker. *The broker must deplete its loan post, which it does not want to do, since it prefers to keep its inventory of shortable shares available for true shorting clients.*


I don't buy the bolded part.

You need a margin account to do a short-first gambit. The shares held in a margin account are available for borrow by the broker. You short 200 shares of RY. Broker's inventory of shortable RY shares goes down 200 shares. Moments later, you long 200 shares of RY. Broker's inventory of shortable shares is replenished by the same 200 shares.


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## humble_pie (Jun 7, 2009)

GoldStone said:


> You need a margin account to do a short-first gambit. The shares held in a margin account are available for borrow by the broker. You short 200 shares of RY. Broker's inventory of shortable RY shares goes down 200 shares. Moments later, you long 200 shares of RY. Broker's inventory of shortable shares is replenished by the same 200 shares.



no. The short shares are at an exchange in one country, say at the NYSE in the US.

the long position is at an exchange in a completely different country, which in this case would be the TSX in canada.

the 2 nations aren't connected. They have different regulatory authorities. Their exchanges have never heard of each others' positions.

if what you said above would be true, why do you think both the US & canada have observed strict "don't short the box" regulations ever since the US securities act of 1934? 

the regulation was enacted during the Great Depression because many investors were protecting plunging stock positions by shorting. Financial institutions were not able to properly cover (as is glaringly obvious with a canada/US pair of exchanges). Thus the financial houses were being gravely harmed, in addition to all the other depression-related stresses upon them.

obviously the odd Short-first Gambit here or there won't matter. But if enough people start trying this, the broker will be inclined to defend itself. As the TD has always done in the past. Your 2 or 3 trades per year, in very recent years, are the only ones i've ever heard of that went through smoothly. They happened because you knew how to slip through the starter blocks .each:


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## james4beach (Nov 15, 2012)

humble_pie said:


> in closing, james, may i ask you a question. From your quote above, it looks like you attempted a 2nd gambit, perhaps today, in which you shorted first as per goldstone's script. Is that what happened? ie i'm wondering if you first tried a Scrappy gambit, which you described further upthread, & then a day or 2 later you tried a Short-first?


Actually no. This was still related to the first scrappy gambit I attempted on Friday, not a new one. When I phoned and asked them to CFO, the "manager" said he'd do some shuffling and _he suggested_ I short the stock instead. So he changed the order so that it was a short stock order in the short account. I agreed with the idea upon his suggestion. It was CFO'd the same day, so as far as the system shows now, I (well really the supervisor) shorted the stock. That was the previous conversation I posted Friday.

This short, that yesterday's rep complained of, is not a trade that I ever placed. The "manager" changed my order to a short. When I phoned in yesterday, it was to make sure the journalling action was going to take place.

Basically I encountered two different TD reps, back to back, one who first lectured me and then changed my order, and the second one who lectured me about the changed order that the previous rep changed. _TD really needs to get their act together._

So I could have replied: it's your own guy who rejected my original order and insisted I change it to a short sale


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