Norbert’s Gambit Calculator Canada
This Norbert's gambit calculator compares converting CAD and USD through an interlisted security with your bank's FX spread, and finds the breakeven.
What it does
The Norberts gambit calculator compares two ways of moving money between Canadian and US dollars: letting a bank or broker convert it at the mid-market rate less their spread, or buying an interlisted security in one currency, journalling it to its twin listing and selling it in the other. It reports what each route leaves you with, what each one costs, and the amount below which the gambit is not worth the trouble.
Data sources & parameters
This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
Saving = amount × bank spread − (2 × commission + ECN fee + journalling fee + amount × slippage); breakeven amount = fixed costs ÷ (spread − slippage)
How it works
The bank route takes the spread straight off the proceeds, so the spread is the whole cost. The gambit route converts at the market rate but pays two commissions, any ECN and journalling fees, and the bid-ask slippage on the round trip. The difference between those two cost figures is the saving, and dividing the fixed costs by the spread net of slippage gives the amount at which the two routes break even.
Where it is used
- Deciding whether a US-dollar purchase is large enough to justify the gambit
- Pricing what a bank FX spread actually costs on a specific transfer
- Comparing brokers on commission, ECN fees and journalling charges
Worked example
Converting CA$25,000.00 of Canadian dollars into US dollars at a mid-market rate of 1.39 CAD per USD, a 2.5 per cent bank spread costs … and leaves …. The gambit costs … in commissions and slippage — … of the amount — and leaves …, which is … more US dollars, or … of Canadian dollars saved, … of the transfer. The effective rate improves from … to … USD per CAD against a costless mid-market benchmark of …. Below … the two routes cost the same and the gambit stops being worth the paperwork.
What the Norbert’s gambit calculator does
The calculator compares two ways of turning Canadian dollars into US dollars, or the reverse: converting through your bank or broker at a rate with their spread built in, or converting through an interlisted security so the exchange happens at the market rate and you pay trading costs instead.
Enter the amount, the direction, the mid-market rate, your institution’s spread and your broker’s per-trade charges. The tool reports what each route leaves you with, what each costs, the effective exchange rate of each, and the amount below which the exercise stops being worth it.
Where the bank spread goes
A retail FX spread has no fee line and no receipt. The institution converts at a rate a little worse than the market rate, and the difference is the charge. At large Canadian banks it has historically been around two to three per cent for retail customers, though it varies by institution, account and amount.
On a $25,000 conversion, 2.5% is $625. The results show the spread as a dollar figure next to a costless mid-market benchmark.
How the technique works
Some securities are interlisted: the same security trades on a Canadian exchange in Canadian dollars and on a US exchange in US dollars. Some exchange-traded funds come in Canadian-dollar and US-dollar versions of the same holding, which track each other closely and are the usual vehicle.
You buy the Canadian-listed version with Canadian dollars, ask the broker to journal the position to the US listing, an internal bookkeeping move rather than a sale, and then sell the US-listed version for US dollars. The effective exchange rate is the market rate, because the market set both prices.
The costs are two commissions, any ECN or exchange fees your broker passes on, a journalling fee where charged, and the bid-ask cost of buying at one price and selling at another. Each is an input, because each varies by broker.
A worked example
You convert C$25,000 to US dollars at a mid-market rate of 1.39, against a 2.5% bank spread, with $9.95 commissions and 0.05% slippage. The bank route leaves you about US$17,536 and costs C$625. The gambit leaves you about US$17,962 and costs about C$32.40. The saving is about US$426, or C$593, and the breakeven amount is about C$812.
The breakeven amount
The bank spread is a percentage, so it doubles when the transfer doubles; commissions and journalling fees stay fixed. There is always an amount below which the bank is cheaper, and the calculator solves for it: fixed costs divided by the spread net of slippage. Above it, the saving grows roughly in line with the amount.
With a commission-free broker the breakeven falls towards zero and only slippage remains. With a journalling fee on top of two commissions it can be several thousand dollars, so a fixed rule of thumb is a poor substitute for the calculation.
What the calculator does not model
Market risk. Between the buy and the sell you hold a position, and the price can move against you by more than the spread you were avoiding. On a short hold in a broad-market fund the risk is small, but it grows with the size of the conversion and the length of the delay.
Your broker’s rules. Some journal on request for free, some charge a fee, some only by telephone, and some not at all in certain account types. Confirm before buying anything: a position you cannot journal is just a trade.
Tax. A sale is a disposition, and adjusted cost base in a non-registered account is its own subject.
Reading the results
The headline is the saving in the currency you receive, the figure that lands in your account. Below it the saving is shown in the currency you started with, with each route’s total cost and effective rate. Comparing both effective rates with the mid-market benchmark shows how much of the theoretical saving your trading costs used up.
A negative saving means the bank is cheaper at that amount with those inputs, which is common on small transfers.
This is an estimate for comparison, not investment, tax or financial advice. Rates, spreads and broker fees change, and only your own broker and institution can confirm the figures that apply to you.
About This Tool: Norberts Gambit
Norberts gambit: use this tool to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.
Frequently asked questions
What is Norbert's gambit in one sentence?
How large does the transfer have to be before it is worth doing?
Why does the calculator charge two commissions?
What is the slippage input for?
Why do I have to enter the exchange rate myself?
Is there a risk the two routes do not match the estimate?
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