How do Canadians hedge USD/CAD fluctuations within RRSPs?

    Posted by rojoch on 6th of Jan 2017 at 02:09 pm

    Keep getting burned on the USD/CAD exchange rate when making swing trades because all my trades settle in CAD.

     

    Most recent example: Bought 400 HFC on Dec 23rd @ $33.04 USD.  Set stop limit at $32.38 USD ($200 USD risk at the time).

    Stopped out today (2 weeks later) at 32.38 USD.

    However, it will settle as a $500 CAD loss because the USD/CAD exchange rate has changed during this time.

    This has happened over and over and over for me.

    How do people trade USD stocks within Canadian RRSP / RESP plans??  Surely this is a common problem.

    Thanks!

    .../john

    td

    Posted by greatmedia1 on 6th of Jan 2017 at 07:44 pm

    Hello; I'm using TD Canada trust (iphone app), but to answer your question more specifically, I have a US trading account as part of my Canadian account. So I transfer from my regular chequing account into my regular investing account, but into the US funds area.....

    I hope this answers your question.

     

    Automatic Wash Trading at TD Waterhouse

    Posted by polish1 on 6th of Jan 2017 at 02:34 pm

    Td Waterhouse allows clients with a self-directed RRSP account to automatically wash the sale of US-listed stocks or ETF's into TD US$ Money Market Fund(TDB166)If you buy and sell on the same date,TDW automatically washes your trades at the same exchange rate.

    Thanks polish1.  Do you have

    Posted by rojoch on 6th of Jan 2017 at 04:55 pm

    Thanks polish1.  Do you have to phone TDW each time (which I remember doing with TDW 10+ years ago)?  Or can you configure your online account to automatically do this now?

    10 years ago

    Posted by greatmedia1 on 6th of Jan 2017 at 07:45 pm

    I remember trading 10 years ago too, I'm back into it now, everything has changed.

    TDW handles wash trades automatically.Just

    Posted by polish1 on 6th of Jan 2017 at 07:24 pm

    TDW handles wash trades automatically.Just a tiny comment re US dividends.TD Waterhouse will not wash dividend payments.You have to call TD Waterhouse trading desk and sign up for automatic wash trading.Hope this helps.

    I use duckduckgo search engine

    Posted by sschulman on 6th of Jan 2017 at 02:26 pm

    I use duckduckgo search engine and came up with this site.
    http://canadiancouchpotato.com/2010/11/29/holding-us-dollars-in-registered-accounts/
       
    Here's a quote from the site:
    RBC Direct Investing recently became the first bank-owned brokerage to allow Canadians to hold US dollars in registered accounts, such as RRSPs and Tax-Free Savings accounts (TFSAs).

    The article is dated November 2010 so maybe more brokerages are allowing this nowadays. You probably have to search around. It's a hassle but maybe worth it.

    Thanks sschulman, I'll check out

    Posted by rojoch on 6th of Jan 2017 at 05:33 pm

    Thanks sschulman, I'll check out the link.

    I found this link in

    Posted by rojoch on 6th of Jan 2017 at 05:41 pm

    I found this link in the comments at that site helpful too:

    http://canadianmoneyforum.com/showthread.php/4828-TDW-RRSP-Currency-conversion-vs-quot-the-Gambit-quot

    At the time of writing, it required a phone call *every* time... which could really add up if you're doing several trades per day.

    There's got to be a better way.

    CAD/USD in RRSP

    Posted by mla127 on 6th of Jan 2017 at 02:21 pm

    Some brokerage houses offered USD denominated RRSP and TFSA, so you change once, bit the bullet and that's it ... you are in US currency   ... i'm with TD and they don't (yet, as they told me it's in the plan for 2017) , so until then, I NEVER buy US stocks in my CAD accounts. 

    I too am tempted to

    Posted by rojoch on 6th of Jan 2017 at 04:59 pm

    I too am tempted to avoid US Stocks in my CAD accounts *but* all my investment assets are within RRSPs/RESP/TFSA.

     

    BreakpointTrades only seems to run their analysis on US Stocks though, defeating the purpose of being a member here Smile

     

    Is there a way to *hedge* against currency movements by buying/selling offsetting USD whenever a trade is made?

    You can get preferred exchange

    Posted by mulisko on 6th of Jan 2017 at 02:27 pm

    You can get preferred exchange rate with TD and ITrade. Will be somewhere between the daily rate offered to all the others. With ITrade you pay I believe C$30 per quarter per account. Have the same problem. Buy Canadian. And remember you can also be saved if US$ goes higher between your trades.  

    Thanks mulisko, I'm currently with

    Posted by rojoch on 6th of Jan 2017 at 05:08 pm

    Thanks mulisko, I'm currently with TDW and iTrade.

    With iTrade, I pay $30/quarter for the "US-Friendly" account which:

    • keeps the USD/CAD exchange fixed for all trades in a given day (setting it after the market closes) -- which works well *only* if you close out all your trades every day
    • uses the same USD/CAD exchange rate on buys and sells (i.e. no spread).

    However as soon as a trade continues past the end of the initial day, I'm back into playing roulette with the currency movements. 

    And iTrade's real-time P/L figures (in FlightDesk) don't use the fixed rate when showing the P/L of a given stock.  I've had several times where FlightDesk shows a CAD profit when I sell, but it settles as a loss two days later.

    For some reason, I rarely seem to be holding stocks when the exchange rate moves in my favour.

    This Spring, I suffered a 40% drawdown on a huge position (yes, I know, the dangers of using fundaments-only rather than technical indicators).  Half that loss (20%!) was due to how far the USD/CAD exchange rate had changed since I bought the stock 6 years earlier (turned a 6-bagger into a 4-bagger).

    The problem with buying just Canadian stocks/ETFs is the lack of sites (like this) that provide good technical analysis on them....

    Has anyone found a good source for Canadian technical analysis?

     

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