Money, Modeled
Accounts & tax

Norbert's Gambit explained: convert CAD to USD for a fraction of the fee

November 7, 20266 min read

Converting $10,000 at a 1.5% conversion fee costs $150. Norbert's Gambit can bring the cost of the same conversion down to roughly $20 in a typical example. It takes a few extra steps and a couple of days.

How it works

The trick uses one fund with two listings on the Toronto Stock Exchange: the Global X US Dollar Currency ETF. DLR trades in Canadian dollars, DLR.U in US dollars. They're the same units.

  1. Buy DLR with Canadian dollars. A limit order caps the price you pay.
  2. Journal the units to DLR.U. Your broker moves them to your US-dollar account of the same type, TFSA to TFSA, RRSP to RRSP.
  3. Wait for the journal to finish, often about two business days.
  4. Sell DLR.U and receive US dollars.

Converting CAD to USD this way, your exchange rate is largely set when you buy DLR. Going the other direction, the rate stays exposed until you sell DLR.

A worked example

With DLR at about C$14 a unit and DLR.U at about US$10.10 (example prices), $10,000 buys 713 units for C$9,982. Selling them gives roughly US$7,200, before selling costs. Add a journal fee (C$9.95 plus tax at both Wealthsimple and Questrade, at the time of writing) and the buy and sell spreads, and the total cost comes to around $20.

When it isn't worth it

  • Account fees. Some brokers require a paid plan for a US-dollar account. If you only convert once, a year of subscription can cost more than you save.
  • Cheaper alternatives. Interactive Brokers' manual currency conversion is very cheap, and services like Wise show their fee upfront.
  • Small amounts. Fixed fees weigh more on small conversions. There's no universal break-even; it depends on your broker's fees and spreads.

Mistakes to avoid

  • Don't sell DLR.U before the journal completes. At some brokers that creates a short position or a rejected order.
  • Leave enough Canadian cash for the journal fee.
  • Check that your broker supports journaling between the two listings, and how it's requested.

Try your own numbers in the Norbert's Gambit calculator.

Fees and processes change; check your broker's current pricing and instructions. Education only, not financial, tax or investment advice. Numbers are illustrative; check your own situation, or speak with a licensed professional.