What is Norbert's Gambit and why it is called so?

Short Answer

Norbert's Gambit is a cheap method to convert CAD to USD and vice versa using an online discount brokerage account. It is named after its founder Mr. Norbert Schlenker.

Detailed Answer

What is an exchange rate?

An exchange rate is the cost at which one currency can be brought with the other. For example, $1 US dollar is equal to $1.37 Canadian dollars. This means that if you need to get $1 US dollar then you need to spend $1.37 CAD. Similarly, if you need to buy $100 US dollars, then you need to spend $137.34 Canadian dollars.

When a Canadian travels to the United States, then he will need US dollars. He/she can exchange currencies at banks, shopping malls, ATMs or the exchange kiosks found in the border. The conversion points charge for its service of converting one currency to another. The average fees are somewhere between 1% to 4%.

What is Norbert's Gambit?

Norbert’s Gambit is a technique which is used to convert CAD to USD and vice versa in a cheaper rate using discount brokerage accounts. For this, you open a brokerage account of your choice that offers access to both US and Canadian markets. Purchase DLR in Toronto stock exchange, call your broker to journal your shares to US exchange and when you now sell your DLR, you will have US dollars in your brokerage account. This can be withdrawn and used for various purposes. This can be done the other way around for the US residents to get Canadian dollars.

Why it is called so?

Norbert: This method of currency exchange was first devised and explained to the forum in ‘The Wealthy Boomer’ in 2001 by Mr. Norbert Schlenker.

Gambit: It is a chess term used when a player risks his pawn, which is of small importance to gain greater advantages in the future. In general, it means making a calculated move or taking a calculated risk for profits.

Hence, this technique was named as the Norbert’s Gambit.

Norbert’s Gambit in conclusion

Although you can reduce the fees using Norbert’s Gambit, you cannot totally do the conversion at free of cost. In fact, you pay fees two times, brokerage while buying and while selling the ETF. It is useful only if you are converting high volumes of money and if you can wait upto 5 trading days.

Tagged With: convert cad usdconvert currencynorberts gambitwhats norbert's gambitcheap currency conversion
Categories: Finance
Ask Your Query for FREE, Get quick answers from our FINTRAKK community!
Discussion (0)
Related FAQs
Is Norbert's Gambit worth it?

Using Norbert's Gambit is worthwhile given some conditions - when you do not have to convert your currency immediately and/ or when you need to convert a large sum of money.

How much does Norbert's Gambit save?

You will save a considerable amount on conversion fees, by following the Norbert's Gambit. Our calculations suggest that you can save around $2,100 CAD for converting $100,000 CAD into USD.

How does Norbert's Gambit work?

Norbert's Gambit process has various steps starting from buying DLR.TO, journaling the shares, selling DLR. UTO, and finally selling the shares in the US stock exchange.

How long does Norbert's Gambit take?

In Norbert's Gambit, you need to buy, journal and sell DLR ETF. It takes around 5 business days for the Norbert's Gambit process to be completed.

Is Norbert's Gambit legal?

Yes, Norbert's Gambit method of currency conversion is legal in Canada. It is not restricted by any registered authorized of Canada.

Can you trade options on Wealthsimple?

Yes, now you can trade options through the Wealthsimple platform. Options trading is only available on the latest version of the Wealthsimple mobile app in your DIY accounts. You'll be able to buy or sell options in any of your self-directed trading accounts through the Wealthsimple mobile app. The best part is, there is no minimum account balance required.

What are Thinkorswim alternatives in Canada?

There are many alternatives to Thinkorswim in Canada. Some noteworthy platforms are Questrade, Wealthsimple & Scotia iTrade.

How to close BMO bank account in Canada?

You can either visit the bank branch or call customer service number to close your BMO bank. Let's know the steps of closing a bank account.

How to open a Bank account in Canada as a newcomer?

There are various steps involved and documents required for a newcomer to setup a bank account in Canada. Continue reading to grab details on bank accounts for new immigrants in Canada.

Which bank has the highest interest rate on savings account in Canada?

According to our analysis, CIBC eAdvantage Savings Account seems to offer the highest interest rate in Canada. Let's see why CIBC ranks high in interest rate offered.