Monday, December 19, 2011

Weird warning messages at RBC

So I went to do a Norbert's Gambit trade on an interlisted stock at RBC Direct Investing and got the following scary error message.



Turns out, after I call customer support, that this message is just a warning. As long as you properly execute your trade you will not receive any currency conversion fees.

One side effect of this is there was a 20 minute delay between my buying and selling stock. I've always managed to do it in seconds. The end result was a 0.0754% effective conversion fee on the trade which is fine. The morale to the story I guess is, while separating the buy and sell increases risk, generally speaking it's not the end of the world if you have to call in to confirm details before finalizing a trade.

Tuesday, July 5, 2011

Reverse POT

So I am moving to the US for a new job, suddenly I need to convert CAD to US. Time for a reverse norbert's gambit using TSX/NYSE: POT as my conversion stock.

Currency value at time of trade: 1.00 CAD = 1.03991 USD

I am going to go a into detail with this post and include all the numbers. I purchased 275 shares of TSX:POT at $55.68 CAD a share with a $9.95 trading fee through RBC direct investing. Total cost: $15321.95 CAD.

I then sold these same shares immediately as NYSE:POT at $57.94 with a $9.95 trading fee, for a total proceeds of $15943.45 USD.

My personal conversion rate for the transaction: 15943.45/15321.95 = 1.04056

So instead of paying currency conversion fees, I got slightly lucky and made .65 basis points in profit on the transaction. Much better than paying fees!

Tuesday, April 12, 2011

I tried POT

By POT I of course mean Potash Corp of Saskatchewan. I did another try at Norbert's gambit, with similar success. POT was recommended to me in a comment because it has a high liquidity, and is traded on both TSX and Nasdaq.

For anyone new to checking out my blog, Norbert's Gambit is a system where you buy a security on one exchange, and then sell it on another, effectively converting one currency to another. Efficient market keeps the price of the security very closely aligned with the current exchange rate.

The net result of my trade after fees was:

  • Obtained: $0.96 CAD per USD
  • Exchange rate at that moment: $0.9567 CAD per USD
  • Result: Profit of $0.0033 over the exchange rate
So I got lucky and made money on my transaction, that's a lot better than paying fees to a bank to turn my currency from USD to CAD.

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