Norbert's Gambit

Norbert’s Gambit is a strategy Canadian investors use to convert between Canadian and U.S. dollars without paying the steep foreign exchange fees that brokerages typically charge. Instead of using your brokerage’s currency conversion (which often includes a 1.5% to 2.5% markup), you use the stock market to do the exchange yourself.

How it works

You buy a stock or ETF that trades on both the Toronto Stock Exchange (in CAD) and a U.S. exchange (in USD). The most commonly used security is DLR/DLR.U, a currency ETF from Horizons. You buy DLR in Canadian dollars, then journal (transfer) those shares to the U.S. dollar version (DLR.U), and sell them for USD.

The result is a currency conversion at close to the real exchange rate, with only your regular trading commissions as the cost.

Why people use it

If you’re converting $10,000 CAD to USD, a typical brokerage conversion fee of 1.5% would cost you $150. Using Norbert’s Gambit, you’d pay only your trading commissions (often $0 to $10 total), saving you the bulk of that fee.

The savings get more significant as the amounts get larger. For a $50,000 conversion, you could save $500 or more.

Things to keep in mind

The process varies by brokerage. Some make it straightforward, while others require you to call in to journal the shares. The journaling step can take 1 to 3 business days, during which exchange rate movements could work for or against you. It’s worth looking up the specific steps for your brokerage before trying it for the first time. Our Norbert’s Gambit guide walks through the process step by step.