# My Norbert's Gambit simulation in BMO Investorline



## Tostig (Nov 18, 2020)

Revised per posts #2,3 and 4.

I've never used Norbert's Gambit before so just for fun, I've decided to simulate what's going on with a simulated portfolio and real data.

Day #1, Feb. 1, 2021
Simulated cash position:
BMO exchange rate 1USD = 1.2822CAD (as posted on ~11:37am)
CAD $20,000
USD $2000
Total (CAD) $22,564.40

Let's convert 10,000 CAD to USD.

Using TD:
11:37am Canada: Bid 72.75, Ask 72.77 buy 138 shares at 72.77 = 10,042.26 (CAD) plus 9.95 commission.
After the order has been filled, I then telephone BMO Investorline get placed on hold for an hour and then ask to journal TD from Canada to USA. During this call, I would ask how many days I would normally have to wait for automatic journaling.

(For this revised post, the Bid/Ask data is now gone but Yahoo Finance has the high/low price at 1pm.)

13:00 USA: Low: 56.81, High 56.83 sell 138 shares at 56.81 = 7839.78 (USD) minus 9.95USD commission (note that with TD Direct Investing, it's 9.95 CAD.

So the cash position after these two trades will be

BMO exchange rate 1USD = 1.2837CAD
CAD: $9957.74
USD: $9839.78
Total (CAD): $22,574.31

Now we wait the next day for all the commissions to be deducted. But so far, it looks like 10,042.26CAD had been converted to 7839.78USD which would make the exchange 1USD = 1.2809364548495 CAD.

If I had used the Foreign Currency purchase in BMO: 10042.26CAD would have given me 7726.59 (USD) for an exchange of 1USD=1.2997

So tomorrow after deducting the commissions, we'll see how the updated BMO posted exchange rate will affect what we are left with. And then we proceed to make a purchase of a US stock, QQQ.


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## off.by.10 (Mar 16, 2014)

Tostig said:


> I understand that BMO automatically journals TD from CAD to US so there is nothing I would need to do. If I am wrong, please advise what needs to be done and I will try to account for it.


They do but it takes at least a day, perhaps 3, I don't remember exactly. Until then, your account will show both 138 and -138 shares of TD.

I have read elsewhere that this is the reason you get charged interest if you buy something with the cash the same day, and that waiting one day to use the converted cash avoids that issue. I have not verified that precisely yet but I do know that waiting until everything has settled will avoid the interest. If you try next day, let us know.

They will reverse the interest charge if you call but it's simpler to just avoid it. Especially as getting someone on the phone these days may prove difficult. It's fairly small anyway, 0.065% last time I had it, so nothing to loose sleep over.


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## Retired Peasant (Apr 22, 2013)

This is the 2nd time I've seen this - it's Norbert's, not Norbits


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## fireseeker (Jul 24, 2017)

Tostig said:


> 11:37am Canada: Bid 72.75, Ask 72.22 buy 138 shares at 72.22 = 10,042.26 (CAD) plus 9.95 commission
> assuming order has been filled right away


Your process looks correct. 
The example would be easier to follow if you excluded the extra cash in the account -- i.e. just look at what happens to the $10k being gambitted.
Note that there is a typo in the quoted material -- the bid/ask numbers don't make sense.

And, yes, Norbert's!


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## Tostig (Nov 18, 2020)

off.by.10 said:


> They do but it takes at least a day, perhaps 3, I don't remember exactly. Until then, your account will show both 138 and -138 shares of TD.
> 
> I have read elsewhere that this is the reason you get charged interest if you buy something with the cash the same day, and that waiting one day to use the converted cash avoids that issue. I have not verified that precisely yet but I do know that waiting until everything has settled will avoid the interest. If you try next day, let us know.
> 
> They will reverse the interest charge if you call but it's simpler to just avoid it. Especially as getting someone on the phone these days may prove difficult. It's fairly small anyway, 0.065% last time I had it, so nothing to loose sleep over.


Luckily Yahoo Finance has the minute-by-minute stock price so I'll just use the hi & lo prices about an hour after the TD purchase.

I remember when GOOG turned into GOOGL and GOOG. My 10 shares of GOOG turned into 5 shares of each. When I sold 5 shares of one of them, my holdings listed -5 shares and +5 shares of the one I sold. I called to ask what was going on with that. It was because my original purchase was in Canadian dollars but my sale was in USD. The BMO rep told me that it'll be cleared up by the end of the day.



Retired Peasant said:


> This is the 2nd time I've seen this - it's Norbert's, not Norbits





fireseeker said:


> And, yes, Norbert's!


Funny thing. I had "Norbert’s" in my file but then I saw the other thread and changed my title. I guess, every time I see a contradiction, I should do a Google check



fireseeker said:


> Your process looks correct.
> 
> The example would be easier to follow if you excluded the extra cash in the account -- i.e. just look at what happens to the $10k being gambitted.


There’s a reason I kept the extra cash in. It’s to simulate real-life and later on, I’ll demonstrate how I deal with it.




fireseeker said:


> Note that there is a typo in the quoted material -- the bid/ask numbers don't make sense.


Rats. The Bid at 72.75 is correct. The Ask should have been 72.77, not 72.22.

Stay tuned as I revise my original post.


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## off.by.10 (Mar 16, 2014)

Tostig said:


> Alright. Let’s assume that I had made the telephone call to BMO and waited the hour. Well, I guess that wouldn’t work out in my simulation because it would be highly unlikely the bid and ask would be the same for the TD purchase is USD..
> 
> So now I’m going to edit my original post and end it at the purchase.


Sorry if I wasn't clear, I meant you can call a few weeks later and get the charge removed. As I understand it, it's not supposed to be there. At least they never argued otherwise so I assume it's a small glitch in the system. But it might also be legitimate as technically, I think they're unsettled funds from a day trade. But don't quote me on that ;-)

You can and definitely should buy and sell TD online as close together as you can. Otherwise you are exposed to the price of TD. Just wait a day before you use your converted cash to buy something else (QQQ), as you seem to have planned already.


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## Tostig (Nov 18, 2020)

Day #2, February 2, 2021
9.95 commission deducted from Canadian account for the purchase of TD.
9.95USD deducted from US account for the sale of TD. (12.8CAD)
BMO posted exchange at 11:34am 1USD = 1.2862

Cash position:
CAD: $9,947.79
USD: $9,829.83
Total (CAD):$22,590.92

So the complete Norbert's Gambit included:
10,052.21 CAD used (10,042.26 to purchase 138 shares plus 9.95 commission)
7,829.83 USD returned (7839.78 from the sale of 138 shares minus 9.95 commission) for an effective exchange rate of 1.28383502579239

For the purpose of reporting Capital Gains in your tax return
The sale in Canadian dollars that would be
7839.78USD x 1.2837 =10063.93CAD (yesterday's closing exchange rate)
9.95USD x 1.2862 = 12.8CAD (today's opening exchange rate)
7,829.83 USD=10,051.13CAD




No. Shares​Corporation​Year of Acquisition​Proceeds of Disposition​Adjusted Cost Base​Outlays and expenses​Gain (Loss)​Year Declared​138​TD​2021​$10,051.13​$10,052.21​​-$1.08​2021​

We'll proceed with the purchase of 30 shares of QQQ @327.02 (~11:34am).

30 x 327.02 = 9810.90USD

7,829.83 USD from Norbert's Gambit will be used which is 10,051.13CAD.
1981.07USD from the original 2000USD will be used to complete the 9810.90 to complete the purchase.
In Canadian dollars that's 1981.07x1.2862 = 2548.05CAD

End of Day Cash Position after purchase of QQQ without commission deducted
Exch 1USD = 1.2803
CAD: 9947.79
USD: 18.93
Total (CAD): 9972.03

Tomorrow, the 9.95USD commission will be deducted and with the BMO exchange rate updated, we'll finalize the Cost Base in Canadian dollars for the Capital Gains table of the tax return.


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## Tostig (Nov 18, 2020)

Day #3 February 3, 2021
9.95USD deducted from US account for the purchase of QQQ (11.49CAD)

Cash Position
exch 1 USD = 1.2792CAD (10:27am)
CAD: 9947.79
USD: 8.98
Total (CAD): 9959.28


USD CAD
Norbert's Gambit conversion 7829.83 10051.13
from original 2000USD 1981.07 2548.05
commission 9.95 11.49

Total 9820.85 12,610.67

Tax Return Schedule 3, Capital Gains table



No. Shares​Corporation​Year of Acquisition​Proceeds of Disposition​Adjusted Cost Base​Outlays and expenses​Gain (Loss)​Year Declared​30​QQQ​2021​​$12,610.67​​​​


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## agent99 (Sep 11, 2013)

Maybe I am old school, but I wouldn't try this with an odd-lot like 138 shares. Maybe this works if you buy sell at market price? I still get partial fills on some trades. Maybe enough of TD is traded to not make this an issue? 

I usually just sell a stock I already own on US side when I need US$. I set price that I want to get. Usually a bank, but there are many other dual traded stocks. I just wait until the trade is completed on BMOIL before using the US$, but I probably don't need to. 

For a buy-sell, some say to use DLR/DRL.U. I haven't tried that, but it seems to make sense: Norbert's gambit: A better way to buy U.S. dollars | MoneySense

Right now, I have US$ accumulating and with no trip South, may have to eventually convert to C$! Not a good time though.


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## off.by.10 (Mar 16, 2014)

agent99 said:


> Maybe I am old school, but I wouldn't try this with an odd-lot like 138 shares. Maybe this works if you buy sell at market price? I still get partial fills on some trades. Maybe enough of TD is traded to not make this an issue?


Yes, several million shares on our side and about a million on the US side, on an average day. Odd lots of it are not an issue in my experience and the spreads are always pretty tight. Works well for the gambit.


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## Tostig (Nov 18, 2020)

agent99 said:


> Maybe I am old school, but I wouldn't try this with an odd-lot like 138 shares. Maybe this works if you buy sell at market price? I still get partial fills on some trades. Maybe enough of TD is traded to not make this an issue?
> ..


That's a legitimate concern. Last May my sell order for 250 shares of REI.UN was filled in two days so I was charged the commission twice. I already had more shares of REI at a much lower price so I just wanted to recover my invested cash at the break even point of my higher position.

When I saw the partial fill, I had to quickly recalculate my sell price of the remaining shares to make sure I recover the extra commission I was going to be charged.


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## Retiredguy (Jul 24, 2013)

Thanks for your thread. Not wanting to hijack and its looks like you've concluded so I thought I would add this for anyone using TDDI. I found it to be a great step by step instructional.









Norbert’s Gambit TD Direct Investing


Check out how to use Norbert's Gambit with TD Direct Investing (TDDI).




creditcarrots.com


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## Tostig (Nov 18, 2020)

Retiredguy said:


> Thanks for your thread. Not wanting to hijack and its looks like you've concluded so I thought I would add this for anyone using TDDI. I found it to be a great step by step instructional.
> 
> 
> 
> ...


A few days after posting my completed simulation, I found in Youtube several demonstrations of Norbert's Gambit using DLR and DLR.U for the major banks. For some banks, you can buy DLR and sell DLR.U on-line. But only for BMO you have to telephone customer service to journal and sell DLR.U.

I posted a question why at BMO Investorline, you can't sell DLR.U the same way as you buy DLR because calling BMO would put you on hold for too long. I got back a snotty answer from the video owner.

So I Googled my question and found a detailed discussion on RedFlagDeals.
Even though the discussion started in November 2016, the last post was January 2021.

Here's the complete discussion.








Norberts Gambit at BMO Investorline - RedFlagDeals.com Forums


According to PWL Capital's paper on Norbert's Gambit, here are the steps involved: 1) Buy DLR on Canadian Market 2) Call in to have a trader sell DLR.




forums.redflagdeals.com


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## Tostig (Nov 18, 2020)

Update: I just got off the phone with BMO Investorline.

Using DRL and DRL.U will take three business days to settle and you still have to call them to journal DRL over.

However, buying an inter-exchange stock can be completed the same day. You don't need to journal that stock you bought and sold. And it also works selling the USD and buying the CAD too.


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## AltaRed (Jun 8, 2009)

Indeed. A piece of cake with an interlisted stock at BMO IL (and RBC DI too).


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## dotti (Jul 13, 2021)

AltaRed said:


> Indeed. A piece of cake with an interlisted stock at BMO IL (and RBC DI too).





Tostig said:


> Update: I just got off the phone with BMO Investorline.
> 
> Using DRL and DRL.U will take three business days to settle and you still have to call them to journal DRL over.
> 
> However, buying an inter-exchange stock can be completed the same day. You don't need to journal that stock you bought and sold. And it also works selling the USD and buying the CAD too.


If I buy an inter-exchange stock with BMO IL, do I still have to call IL to journal it over, or can I just go ahead and sell the shares on the NYSE? I hate to have to call and wait for human intervention.


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## AltaRed (Jun 8, 2009)

No. You can buy/sell on either exchange with settlement in the currency of the exchange in which you sell it. That is all part of the 'Trade' tab.

Example: Buy TD on the TSX using CAD and then immediately sell on NYSE with settlement in USD. Vice versa as well. It will take a day or two for the accounting to show up correctly online but it is smooth as silk.


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## OneSeat (Apr 15, 2020)

AltaRed said:


> Indeed. A piece of cake with an interlisted stock at BMO IL.





AltaRed said:


> Example: Buy TD on the TSX using CAD and then immediately sell on NYSE with settlement in USD. Vice versa as well.


How do you identify or confirm an interlisted stock?
I'm not against TD just wondering what others there are.
Thinking or repatriating some of my non-equity USD.


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## AltaRed (Jun 8, 2009)

Canadian stocks with the same CUSIP number on both exchanges are inter-listed. Google and you shall find Quarterly list of interlisted securities for NI 23-101 - History

Just make sure you do NOT use a stock you already own to avoid messing up your ACB of your current holding.


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## OneSeat (Apr 15, 2020)

Thanks a lot - should keep me busy for a few minutes.


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## AltaRed (Jun 8, 2009)

Additional tips: 

There will be a bid-ask spread both ways, i.e. when you buy, for example, TD on NYSE, you buy at Ask... and then when you sell on TSX 15 seconds later, it will be at Bid to get the transaction done quickly to avoid price potentially running away from you (can win or lose depending on the trend).

Best to use a higher priced stock to keep the Bid-Spread down in percentage terms, e.g. a 5 cent spread is less impactful in cost on $30k of a $100 stock (300 shares) than $30k of a $10 stock (3000 shares). Trade in board lots

Best to use a high liquidity (higher trading volumes) stock on both exchanges which may have: 1) lower spreads and less price movement, and 2) less forex mismatch between TSX and NYSE exchanges.

Best to avoid volatile opens and closes. Do the NG between 11 and 2 for example.

Avoid trades around ex-dividend day when there might be more volatility.

The above tips are why those doing NG typically use a higher volume blue chip large cap like the banks, lifecos, railways, etc. .


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## OneSeat (Apr 15, 2020)

All makes sense to me - appreciated.


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## fireseeker (Jul 24, 2017)

AltaRed said:


> Trade in board lots


Data point: I have had no trouble trading odd lot shares of RY while gambitting at BMOIL.


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## AltaRed (Jun 8, 2009)

Maybe because it is a highly liquid stock where trading odd lots is almost as quick as trading board lots.


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## Tostig (Nov 18, 2020)

It worked.

I was looking for an opportunity to do Norbert's Gambit with an interlisted stock. I chose TD.
The Canadian dollar was above $0.80 and even surpassed $0.81 a day ago. Canadian markets were up. But in the US, Fang stocks took a beating on something that Snap had commented. Now it was time to not only buy on a dip but when the USD was on a sale too.

I bought 125 shares of TD from the TSX at $89.07 for a total of $11,133.75.
When the order was filled, TD's price was going up so I sold 125 shares at market on the US exchange and got filled at $71.95436. It took several partial fills to complete the order because of the odd lot. So I got back 8994.295 USD.

At the end of the day, my positions of TD listed
+125 shares in CAD and
-125 in USD.

The next day (Saturday Oct. 23) my positions in TD disappeared. I looked at my cash position. BMO had removed the commissions from Canadian amount for the purchase and the US amount for the sale.

So that makes the transaction:
11143.7CAD to 8984.345USD (0.8062USD = 1 CAD)


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## agent99 (Sep 11, 2013)

I have often done something similar at BMOIL. However, I more than often used bank stocks that I already owned. Only did the full gambit if I had C$ in cash, which is not often! 

I usually choose a bank or other dual-listed stock where a round number of stocks (say 100) results in the amount of US$ I needed.


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## Ponderling (Mar 1, 2013)

I did mine using DOL and DOL.U. 

Moved a chunk of funds in rrsp to USD, and by this maneuver I came out $4600 ahead of what Itrade quoted as the FX charge over the real time exchange rate at time of their pricing.

Two days for the DOL trade to settle, then message on Itrade to journal to DOL.U. One day for that to happen, then sell DOL.U and buy AGG, VTI, IYW, IXUS, RAY, ELI, ABV and a few others. Now no more fx losses to dividend pay outs on US securities, among other strategies.


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## Tostig (Nov 18, 2020)

Ponderling said:


> I did mine using DOL and DOL.U.
> 
> Moved a chunk of funds in rrsp to USD, and by this maneuver I came out $4600 ahead of what Itrade quoted as the FX charge over the real time exchange rate at time of their pricing.
> 
> Two days for the DOL trade to settle, then message on Itrade to journal to DOL.U. One day for that to happen, then sell DOL.U and buy AGG, VTI, IYW, IXUS, RAY, ELI, ABV and a few others. Now no more fx losses to dividend pay outs on US securities, among other strategies.


When I first heard of Norbert's Gambit, it was using DLR and DLR.U. What is DOL? Initially, I thought Dollarama was an interlisted stock but I could not find DOL.U. Is that just a typo?

That's why I now use TD. I can finish the exchange in a few minutes instead of waiting two days to call the broker to do the journalling.

One last thing. My sale of TD on the US exchange also costed 0.05 US TRXN Fee.


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## AltaRed (Jun 8, 2009)

deleted due to brain phart... see post #32


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## Ponderling (Mar 1, 2013)

Thanks for the clarifications. I did not look up the ticker, but recalled they were acronyms for dollar and I recalled the wrong ones. And yes I do hold Dollarama shares , and that probably mis-twigged my memory.


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## Tostig (Nov 18, 2020)

DOL.TO is Dollarama.
Unless I'm mistaken, DOL (US) is Wisdomtree, an ETF.

How are the two related? You can't journal from one to the other.


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## AltaRed (Jun 8, 2009)

Tostig said:


> DOL.TO is Dollarama.
> Unless I'm mistaken, DOL (US) is Wisdomtree, an ETF.
> 
> How are the two related? You can't journal from one to the other.


That is a good point. Indeed it is when I read the 'name' under the symbol.


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