# Currency Convert within TDWH



## Kaitlyn (May 13, 2011)

Just wanted to try a transfer within TD Waterhouse. I got:



> From: CANADIAN CASH - Discount Brokerage - XXXXXXXA
> To: US CASH - Discount Brokerage - XXXXXB
> Amount: $1,000.00 USD = $990.20 CDN
> Exchange Rate: $1.00 USD = $0.9902 CDN


When I look on XE.com I see:


> 1 USD = 1.02634 CDN


Which makes the difference 0.03614. Is that considered normal spread/high/low?

I've never really done forex so I don't know if losing that for every $1k is good or if I should look more into gambit/etc...


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## larry81 (Nov 22, 2010)

3% is pretty much what the majors bankers and brokers charge...

If you want to convert USD/CAD and can wait ~3days for a trade to settle, do it with DLR/DLR.U 

http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/


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## Kaitlyn (May 13, 2011)

larry81 said:


> 3% is pretty much what the majors bankers and brokers charge...
> 
> If you want to convert USD/CAD and can wait ~3days for a trade to settle, do it with DLR/DLR.U
> 
> http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/


I read that... but I just don't get why that is any more special? In the opening line... how is DLR vs DLR.U any different than RIM/RIMM? It even says there is low trading volume so your order may take a while to go through..? :S Meanwhile something like RIM (well.. not that because its been falling recently) has much higher volume and would surely execute right away?


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## gibor365 (Apr 1, 2011)

larry81 said:


> 3% is pretty much what the majors bankers and brokers charge...
> 
> If you want to convert USD/CAD and can wait ~3days for a trade to settle, do it with DLR/DLR.U
> 
> http://www.canadiancapitalist.com/a-foolproof-method-to-convert-canadian-dollars-into-us-dollars/


I send this atcticle to TDW rep who usually answer questions in a fair way. She said that DLR gambit only OK with CASH accounts.

I think in TDW you can buy some stock that trades on both TSX and NYSE, for example SU.TO and sell it on NYSE (I'm not sure if you need to wait until it settles), than park your US $ in US MM fund

TDW is known for very high FX rate, CIBC charges much less


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## larry81 (Nov 22, 2010)

The way is see it is that RIMM (or any other stock) could tank 10% exactly when you perform the gambit while currency dont fluctuate that much


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## gibor365 (Apr 1, 2011)

Kaitlyn said:


> I read that... but I just don't get why that is any more special? In the opening line... how is DLR vs DLR.U any different than RIM/RIMM?


DLR and DLR.U both trading on TSX, this why I was told by TDW rep, that if you buy security call DLR on your registered account, you cannot sell different one DLR.U that trades on the same stock exchange.
RIM and RIMM trading on TSX and NY


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## Kaitlyn (May 13, 2011)

gibor said:


> I send this atcticle to TDW rep who usually answer questions in a fair way. She said that DLR gambit only OK with CASH accounts.
> 
> I think in TDW you can buy some stock that trades on both TSX and NYSE, for example SU.TO and sell it on NYSE (I'm not sure if you need to wait until it settles), than park your US $ in US MM fund
> 
> TDW is known for very high FX rate, CIBC charges much less


I think this is what you are talking about. Just came across it:
http://www.canadiancapitalist.com/easy-norbert-gambit-in-td-waterhouse-rrsp-accounts/

Could buy POT and sell POT on NYSE. I'm confused about the calling the next day to wash it.
a) Why do you have to wait until next day?
b) When you sell it the day before.. where does that money end up?
c) They talk about putting it into the US money market. How do you then actually use that money to buy a NYSE-only stock, for example?

Aren't there also fees associated if you buy and sell a mutual fund quickly? Or is money market different?


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## gibor365 (Apr 1, 2011)

Kaitlyn said:


> I think this is what you are talking about. Just came across it:


You can do a simple check...I think you bought RY.TO and if it's still not settled, you can place trade for RY on NYSE (just add 7-8% that you won't really will sell it - don't beleive it will jump so high in 1 day). If trade won't get rejected , than you can do so in future.

P.S. Agree with larry that this gambit better not perfor with something like RIM, but maybe with some Utility stocks like TRP


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## avrex (Nov 14, 2010)

Kaitlyn, are you talking about an RRSP account or a non-registered account?


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## avrex (Nov 14, 2010)

*1. TDW non-registered account*
I would definitely use the "DLR and DLR.U" gambit that CC describes.
There will be no individual security risk over the time (ie. 3 days that) it takes to journal the shares over because you will use DLR/DLR.U instead.
A Foolproof Method to Convert Canadian Dollars into US Dollars


*2. TDW RRSP account*
I would use the standard gambit involving an individual security (ie. buy RIM-T, sell RIMM-Q).
The TDW system for RRSP accounts allows this to happen immediately (so there is little individual stock risk)
Two examples:
Easy Norbert Gambit in TD Waterhouse RRSP Accounts
TDW RRSP - Currency conversion vs. "the Gambit" 


*TDW RRSP Automatically washes rates*
The above posts may refer to phoning in to wash the rates. However, just recently, TDW now automatically washes the rates, within your RRSP, when dealing with currency conversion. You just need to enrol. See these posts:
Automatic Wash Trading at TD Waterhouse
Toronto Dominion Waterhouse (TDW) RRSP - You can now automatically 'wash the rates'


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## gibor365 (Apr 1, 2011)

avrex, 1. can you do everything online, without calling TDW rep?
Let's say I have "wash" setup. Can I buy SU-TO and right after it fills sell it as SU-N
2. can I do the same in CIBC Investor Edge?


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## avrex (Nov 14, 2010)

gibor said:


> Can I buy SU-TO and right after it fills sell it as SU-N


In a TDW RRSP, yes, you can do this immediately. A TDW rep is not needed.
In a TDW non-registered, you cannot. You must wait for the security to journal. That is why I like the DLR/DLR.U gambit in that case.



gibor said:


> can I do the same in CIBC Investor Edge?


Unknown. I will let someone with a CIBC account give a definitive answer.

Here's a quick summary of posts I've seen from humble_pie on which brokers allow you to 'immediately' execute both sides of the gambit in your non-registered account:
RBC - yes
BMO - yes
Scotia iTrade - no
TDW (non-registered) - no
CIBC - unknown


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## slacker (Mar 8, 2010)

Kaitlyn said:


> I think this is what you are talking about. Just came across it:
> http://www.canadiancapitalist.com/easy-norbert-gambit-in-td-waterhouse-rrsp-accounts/
> 
> Could buy POT and sell POT on NYSE. I'm confused about the calling the next day to wash it.
> ...


@Kaitlyn: I don't recommend that you try the gambit with your current level of knowledge on the stock market.

a) You don't need to wait till next day. Just call after you've made the trade.
b) The money of the proceeds of the sale of POT on NYSE, will go towards TD US Money Market mutual fund. For all practical purposes, it's as good as US cash as far as TDWH is concerned
c) That's just what TDWH does. If you buy US securities on NYSE, TDWH will use your TD US Money Market mutual fund to fund the purchase. If you want to be extra sure, call them and double check. (but don't do the phone trade because that cost more)


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## CanadianCapitalist (Mar 31, 2009)

@Kaitlyn: Please follow @avrex's recipe. If you are gambitting within a RRSP, it is supposed to be automatic. Buy POT on TSX, sell POT on NYSE and if you've signed up for automatic washing you don't even have to do anything.

I use DLR/DLR.U in TDW non-registered cash accounts because TDW has started balking on implementing the gambit. TDW may make you wait for the trade to settle, wait for the stock to journal over which could take up to a week. With DLR/DLR.U you eliminate security risk but you still bear the risk of currency fluctuations over that one week period.


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## NorthernRaven (Aug 4, 2010)

Canadian Capitalist has a new report about a possible unofficial blessing from TDW for gambits in non-registered accounts.


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## Jungle (Feb 17, 2010)

Anyway you could pin this thread to the top? Some very useful information on here. Thank you everybody for contributing.


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## humble_pie (Jun 7, 2009)

*Gambit Update in Non-registered Accounts - 28 jul/11*


BMO - instant - 2 online orders (buy/sell) @ web commish.

RBC - instant - 2 online orders (buy/sell) @ web commish.

TDW - delay + journal - 3-5 days in DLR/DLR.U @ web commish.
or
TDW - instant - all interlisted stocks - buy @ web commish + phone rep to sell @ agent commish.

Scotia iTrade - delay + journal - 3-5 days - all interlisted stocks + DLR/DLR.U @ web commish.

CIBC - unknown
Questrade - unknown
National Bank - unknown

does anyone have any additional info. If so, please post.

note: above table is for non-registered accounts only. Registered accounts differ. Terms can be slightly better. For example instant gambitting @ web commish can be done with interlisted stocks in TDW rrsp; however make sure that USD proceeds of sale get "washed" into US money market fund.


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## navanman (Aug 15, 2011)

*Advice*

New to the concept of gambit currency exchange procedures. Can someone advise on exchanging a large amount (75K) from Cdn to US?


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## mrPPincer (Nov 21, 2011)

humble_pie said:


> *Gambit Update in Non-registered Accounts - 28 jul/11*
> 
> 
> BMO - instant - 2 online orders (buy/sell) @ web commish.
> ...


I can report that the representative I spoke to at Virtual Brokers said that they do not currently provide this service... ie: you can't do the gambit at Virtual Brokers

I am however still gonna give them a try with some C$ due to their low trading fees and their lineup of no-fee etfs.


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## mrPPincer (Nov 21, 2011)

mrPPincer said:


> I can report that the representative I spoke to at Virtual Brokers said that they do not currently provide this service... ie: you can't do the gambit at Virtual Brokers
> 
> I am however still gonna give them a try with some C$ due to their low trading fees and their lineup of no-fee etfs.


update..
Main reason why I'm with TDWH now, besides the fact that VB wouldn't let me do a gambit..
The user agreement for VB's WebTrader trading platform, as noted in the following post..
http://canadianmoneyforum.com/showt...irtual-Brokers?p=155987&viewfull=1#post155987


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## none (Jan 15, 2013)

Did my first Gambit today - I may have done it sub optimally but the results came out in my favour. Used BMO
1) purchased BMO @ Bid on TSX
2) Once filled sold BMO @ ask on NYSE
3) Called TDW to confirm the wash - turned out that one account wasn't set to autowash - they are working to fix that

Math:
Purchased: 17,684.64 CAN
Sold: 17,393.69 US
exchange: 0.9834 - pretty good I figure.

So although I know I did this wrong - I think I got lucky with a stock move - How should I do this in the future?

Thank you.


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## GoldStone (Mar 6, 2011)

none said:


> exchange: 0.9834 - pretty good I figure.


Yep, that's very good. XE.com shows a day high of 0.9813. You did better.



none said:


> So although I know I did this wrong


What do you mean? All looks good to me.


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## none (Jan 15, 2013)

Thanks for the feedback Goldstone.

I was more curious about about buying BMO.TO @ bid and selling BMO.NY @ ask. I guess it's quibbling over a few dollars in the grand scheme of things I just thought trying to hit the low on the noise at the buy and high on the noise on the sell was not the best way to do it.

I may need things to settle out to make sure the exchange worked that way - how much i _think_ i sold it for is less than the amount in the account. Kind of clunky but hopefully it'll work out.

According to this article they suggest doing it the other way: Buy at ask and sell at bid...
http://www.finiki.org/wiki/Norbert's_Gambit#An_example


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## mrPPincer (Nov 21, 2011)

I do it the way you did, with limit orders.
I went under the highest bid to purchase and over the lowest ask to sell and it worked out ok.
Helps if it's a stock you aren't worried about holding for a bit if it doesn't sell right away.
I used TD when I did mine and it traded almost instantly.


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## humble_pie (Jun 7, 2009)

none said:


> I was more curious about about buying BMO.TO @ bid and selling BMO.NY @ ask.


none is it possible you might have your words reversed.

i think it's likely you bought at the ask & you sold to the bid.

these are not necessarily the *most* advantageous prices that could be obtained but these are wise procedures to follow, especially for a beginning gambitter.

by paying to the ask & selling immediately to the bid, a gambitter is reducing any chance the stock might move against him in the split second it takes to set up & send the sell order.


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## none (Jan 15, 2013)

humble_pie: That was pretty much the crux of my question, by doing a limit buy on the bid and a limit sell on the ask I was effectively playing the interday variation of the stock rather than doing a quick currency conversion which is the actual goal of the_ transaction_.

It only took about 10 minutes to buy and another 5 to sell at those prices but I could have got stuck holding it for a while.

What I don't understand is this line (this is sold on the NYSE):

25-Apr-2013
30-Apr-2013
BANK OF MONTREAL
SELL
-279	
-
-$9.99
$17,393.69

I know I sold it at 62.07...
279 * 62.07 - 9.99 = 17,307.54

I don't know where the extra $86 is coming from......


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## humble_pie (Jun 7, 2009)

the only way bids or asks can form is for real orders to appear representing real buyers who are bidding at a particular price & real sellers offering at a particular price, right?

so a new buyer who wishes to pay no more than the existing bid can enter a buy order at that price, but his order will go to the end of the queue & he may not get filled. For him to be filled, all prior bidders at that price level will either have to be filled or else drop out by cancelling or changing their buy orders.

the reverse is true on the sell side. If a gambitter is attempting to sell at an ask price that already exists, his new order will go to the end of the offered queue, etc.

these are slightly foolish strategies to follow in any kind of arbitrage trading imho.

i think it's ok to dither around on the buy side, if a gambitter likes to dither, but it's not ok for a novice gambitter to dither on the sell side.

what may have worked in your case, in a totally flukey kind of way, is that stock price was wavering down when you set out to buy, so your buy order, which was on the low side, was filled anyhow.

then - by a fluke - stock price promptly began wavering back up again, so your sell order, which was on the high side, was also filled.

i don't know what "actual goal of the stock" means in these transactions.

re the amounts you see in account:



> $17,393.69
> I know I sold it at 62.07...
> 279 * 62.07 - 9.99 = 17,307.54
> I don't know where the extra $86 is coming from


that higher amount is canadian currency. The system has already converted your proceeds of sale from USD into CAD. The tdw auto-washing procedure will take care of this. Tonight the USD proceeds will start their journey into US MMF. In reality, they will never be converted into CAD. Ignore what you see in your account for the time being.

from this sale, when all the washing is done, you should end up with 1730.754 units of US MMF, provided you don't use any of the funds to buy securities in USD.


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## none (Jan 15, 2013)

Thank humble - I fixed my typo - I meant the actual goal of the *transaction* - not the goal of the *stock*.

Thanks for answering my question and I agree. After it was all said and done, upon reflection it seem like my 'dithering' (as you put it) was kind of silly (even though it worked out in the end).

Fiddling around for a couple pennies on a stock costing $62 a share is pretty silly. I'm guessing the fiddling I did saved me about $10 which certainly isn't worth the risk of a price drop when considering 17K.

Thanks!


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## GoldStone (Mar 6, 2011)

I did a gambit the other day. I used a rather naive trading strategy to tip the odds in my favor. I'm sure HP will laugh at me.

At the risk of looking like a complete fool, here's what I did.

I used Potash. It has huge trading volumes on both exchanges. The spread rarely deviates from 1c. Potash is more volatile than banks, which I hoped to exploit.

I opened 3 browser windows.

Window 1: Canadian buy order ready to go. Step 1 of 3.

Window 2: Google Finance chart of NYSEOT. It is close to real time. I enabled RSI indicator to see overbought/oversold conditions.

Window 3: Level II quotes of NYSEOT. http://www.level2stockquotes.com/level-ii-quotes.html

I watched the chart and the quotes waiting for these 3 conditions:

- RSI in oversold or neutral territory
- start of a steep price uptrend, confirmed by RSI going up
- Level II quotes showing buying pressure: far more buy orders at bid or close to bid than sell orders at ask or close to ask.

Once I saw what I wanted to see, I quickly finalized Canadian buy order. Limit price at the ask or 1c above ask (I don't remember). The order filled instantly.

I immediately prepared US sell order at the market price. I stopped at Step 3.

I turned my attention back to Level II quotes. The buying pressure was still there. I sat and watched US price to climb by a few pennies. A minute or so later the buying pressure exhausted. The price uptrend stopped. As soon as I noticed that, I submitted the sell order and got an instant fill at the bid.

As I said, this is rather naive. I'm not a day trader. I'm sure there are much better ways to execute this.


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## none (Jan 15, 2013)

I think it may be more trouble than it's worth. For POT which trades at $40 a $0.05 bonus is only about $10 on a $10,000 trade. Sure, better than a kick to the neck but if it went the other way that could not be so great.


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## GoldStone (Mar 6, 2011)

No argument here. I think I saved enough to cover two trading commissions.


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## none (Jan 15, 2013)

Yeah, that was my motivation too. I guess it's fine if you're playing in the noise and don't get caught in a downward trend.

Anyway, I now see why everyone thinks norbert's is no biggie. It really is super easy but seems quite odd if you've never done it before.


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## GoldStone (Mar 6, 2011)

I took some very specific steps to catch an upward trend. The method is not bulletproof, of course. One big sell order is all it takes to move the price against you. The odds are 50/50 though. A big buy order can help you.


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## humble_pie (Jun 7, 2009)

naiive? were u saying naiive? pie would laugh?

actually i love it !

none, you can see goldstone's approach. These are the kinds of things a knowledgeable trader might do to coax out a better trade than a first glance at the B/As might suggest.

in none's real-life gambit, it appears to have happened that the carrier stock slipped while none was buying but, by a stroke of good luck, it promptly ticked back up when he was selling.

this is, of course, the dream scenario.

But often in pair trading things don't work out like this. One might be stalking one side intently, hoping for a better deal, but meanwhile the other side is running madly away in the wrong direction.

usually in pair trading i try to do the more difficult side first. But the gambit trader cannot choose between more or less difficult. The gambit trader must buy first, he has no choice.

back to goldstone's gem: there is a 3rd data stream feeding into the picture that i have no feel for, which is why i always hustle to do both sides of any gambit trade snickersnack. This 3rd data stream is the fluctuating CAD/USD exchange rate as established by the world's biggest money-centre banks. A website like MX.com offers quotes that are updated every minute.

in other words, potash toronto can remain unchanged but if canadian dollar plunges on the minute, then potash new york should rise. Also many variations. In another scenario, for example, POT toronto could rise while USD weakens, therefore POT tto would be rising while POT ny might even be falling (not a good scenario for a gambitter travelling from CAD to USD.)

it's because i don't have a feel for the effect of USD/CAD exchange rates that i don't dither around during a gambit trade.


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