American Stocks - Exchange Rate Ding

[Feruk]

It seems that when I buy and sell a stock in the USA, I get dinged as much as 4% on foreign exchange conversion! Spread between 0.9955 and 0.9605 at Q-Trade today. Considering some of the stocks I'm buying pay a 2-5% YEARLY dividend, that really pisses me off. How do you guys get around this? For the sake of this discussion, let's leave the Canadian hedged ETFs and other financial products out of it and assume individual stock purchases. Any recommendations on brokers that don't charge this FX charge, or do you do all your trading in USD? If I can find someone, goodbye Q-Trade.

[ExtraSlow]

I haven't traded may US stocks lately, but if you are going to do it, you want a USD account so you aren't getting dinged on every buy and sell.

[gram]

I just had this same conversation with Questrade and my bank.

The best solution we could come up with is to hold a USD bank account and transfer back and forth that way. This will work for any of the brokerages. You will need to have a USD account set up with Questrade (along with a CAD) one.


It will save you the ding from Questrade but I am not sure what happens when you switch those USD funds to CAD funds at your bank (fees might apply-in my case they don't)


Good luck,

[roopi]

USD Brokerage account. All major brokerages offer this. You only need to buy USD once this way.

[Strider]

Not sure how the commission compares, but with TD Waterhouse, you can use Norbert Gambit for your first trade (find a stock that's interlisted on TSX and NYSE, buy on TSX, and have them journal the shares to the NYSE listed stock).

Then set up automatic wash trades.
When you sell a USD stock, it'll automatically purchase an equivalent amount in a TD USD money market fund. When you buy another USD stock, it'll sell the equivalent amount in the USD money market fund.

This way, you never pay a penny in conversion fees.

[ZenOps]

Yup TD.

Just set it up so they don't convert back to CDN until you ask to. Then you can do as many trades as you want.