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Stephane Courchesne

Canadian account problem CAD/USD with IBKR

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Hello everyone,

I'm not used to post on forum but this time " I NEED HELP " with currency fees from Interactive Broker.

I have a big problem with IB and intraday loan fees.  I trade in the US with my IB account in Canada.  I also use DAS as a platform.

Here is my problem:  Since my account is in CAD, IB make a loan for every trade in USD. From my research, here how it works  https://ibkr.info/node/722

I was getting used to have some variations  sometime with the exchange with my Canadian $ account:  -50$ or -100$, -200$ per day. Sometime it give me +50$ or +100$ but this is more rarely.

I trade the US stock but at the end of day, with my daily report, IB close the day and make the calculation for the exchange CAD versus USD.

  • For the month of January:  I lost 585$ US just with the exchange even if I made good profit.
  • In February, I lost 420$ US again with the exchange.
  • And on Monday this week, March 9 2020, I was happy to have made 305$ with only 22$ in commission with only 3 trades : AAPL. AMD and NVDA But I lost 750$ US with the exchange USD/CAD!!!  See my IBKR report in attachment (sorry it's in French).2020-03-09 IBKR report.pdf
  • All my trading was done by 10:40 and the index USD/CAD started to run up by 12:00. See chart in attachment.
  • I can’t believe that a US citizen would make a nice trading day of 305$ US with 22$ commission and end up loosing 750$ with the exchange.

I call IB last week to change my Canadian account in US$. They told me that it goes with the country of residence. The guy was not really helpful.

Yesterday, since all lines where busy at IB, I tried the chat. The guys told there was noting to do even if I challenged him that it's impossible that a American with a US account would pay 750$ for making 305$.

Again, yesterday, with the choppy market, I broke even with 60$ of profit and 60$ of commission and ended up loosing 150$ with the currency exchange.

Does anyone have the same problem?

I CAN’T CONTINUE TO TRADE WITH THIS SETUP… I NEVER KNOW WHAT WOULD BE THE RESULT OF MY TRADING AND LOOSING TO MUCH MONEY WITH  CAD/USD

With this setup, I have no choice but to change Interactive Broker for another broker that would accept to open a account with USD.

Any advices and recommendations would be really appreciated.

Thanks,

Stéphan, Gatineau, Québec, Canada

2020-03-09 USD_CAD.JPG

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I call IB last week to change my Canadian account in US$. They told me that it goes with the country of residence. The guy was not really helpful.

I think this is the issue. You don't want to change your account you just want to deposit USD into your Canadian IB account and then trade with that.

I just opened a chat with them a few hours ago trying to figure out this issue for you. They stated that if you deposit USD there will be no currency conversions; you will trade US stocks with your USD.

Edited by Justin
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Hello Justin and thanks for your fast reply.

 

I am surprised that you had a quick and satisfying answer. If it's so simple, why didn't they offer it to me? Why not change my actual Canadian dollars in US dollars?

Are you waiting for more info or if it was their final answer?

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I think maybe it's because you were asking to change your account, opposed to asking how to just trade with American dollars?

I'm not waiting for more information as this isn't an issue for me. I only opened a chat with them to help you 🙂

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9 hours ago, Abiel said:

@Stephane Courchesne did you read this post? 

 

Hello Abiel,

Yes, I already read this post since I tried to contact Robert first and Justin informed me that he was not with BBT anymore.  If your accont is fill with CAD and trade in the US, it will end up having the same situation as me. In a normal market, it's not that bad but with all the volatility, I loose money with the exchange.

The problem is serious. Yesterday, I made 185$ with 34$ in commission, lost 369$, I'm going down with good trading. It's insane.

I found IBKR really don't care about my problem, it's not their money.  I made my problem clear and explain I was trading in the US only and want my account in USD: no solution from them.

Justin, from the forum, reply me that he made the verification and it seem I just have to fill my accout with USD. Hope it's just that simple.

Does Andrew knows about this problem for Canadian?

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Good news,

I fanally solved my problem.  Since IB where busy with the Covid-19, it took me 3 weeks in total to make all arrangements and have my USD account working.

First, I took out my CAD $ from my IB account.

I've then opened a USD account over the Internet with my current Royal Bank of CANADA but it did not work. They could not make a USD transfer to a Canadian provider since it was going to convert my USD deposit to CAD and I could not link this account to IB. They had to transfer me to another department for USD account with RBC in USA.

I then checked with Bank of Montreal where I have another account ond opened a USD account. Took me 2 minutes over the Internet.  I then linked my account directly with IB.  After the verification, I was able to make a deposit in US to my account.

Now, everything is working perfectly, I don't loose even 1$ from my gains. 

Hope this topic could help someone.

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I was referred to this thread when I asked about the base currency of the IB on the other thread.
I was about to deposit money to my new IB Canada account and I got concerned about this issue and I chatted with the IB representative. They said you could just exchange/convert everything from CAD to USD at once and done with it, and you don't have to borrow USD every time you trade. You can also deposit USD directly but it seems like you don't have to do that.

I haven't deposited my money yet so my information could be wrong but it is what the chat representative told me.
Although it is an old thread but I  wanted to share it.

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Thanks to the contributors on this thread. This is something I'm watching for when the time comes to go live.
I came across an answer on the IB Canada FAQ about making a forex trade to convert it. "Do you automatically convert funds when I buy a US stock?" It speaks more to IB's platforms.
Looking at DAS, it looks like you need to ensure you have the forex feed to trade it.  https://dastrader.com/docs/how-do-i-trade-forex/  which my BBT Simulation account does not have so don't know for you.
I'll have to see if my bank has the same USD to USD in Canada issue that Stephane ran into with RBC.

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Hmm i'm assuming your IB account is a margin account (not a cash account).

I also have multiple open "virtual forex" positions. Where I have cash in AUD , SGD, HKD, USD, where some of these are for my long long positions.

When I day trade, all the commissions and fees are charged on the USD. (my base currency is SGD by the way) Doesnt seem to have a problem. I also haven't seen any currency conversion problems..

But maybe that is because all my accounts are in the positive.

Is it because you are on a cash account? And they had to charge a commission in USD so they converted the CAD for you? And they charge about ?6USD per conversion. 

Have you tried to convert your CAD cash to USD? 

Anyway, i'm a happy customer of IB, its a really complex piece of thing, but once you get the hang of it, it just works. 

Edited by paul ang

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I chatted with an IB representative who was very helpful.

In short, it seems like there is nothing to worried about when it comes to the exchange rate. I don't think you have to convert everything to USD (or deposit in USD) either.
Here is an example. If I have $1,000 CAD and $0 USD and I want to buy a $100 stock, then I am borrowing $100USD from IB. At this point, I have -$100 balance in USD. If I have a winning trade and now I sell the stock at $120, then I have a $20 profit. My USD account balance now will be $20. If I lose and sell the stock at $80, then now I have -$20 balance in USD. For -$20, I will have to pay some interest to IB or you can convert the amount from your CAD balance. As you can see, there is no place for the exchange rate to come in because I would be simply trading in borrowed USD, not CAD that is converted to USD. 

However, the exchange rate changes every day and when it comes to the total balance shown in USD it changes every day even if you don't trade at all. With the $1,000 CAD scenario, if the USD/CAD  exchange rate is 0.8, then your balance in USD is $800, but if the rate drops to 0.78, then the balance will be $780. You would still have $1,000 Canadian. If the CAD value drops significantly, then the total value of your balance in USD drops significantly too and even if you win some trades (in USD), you may have less USD equivalent (as your base currency) at the end of the day than when you started trading in the morning. I think it is what happened to the OP. But I believe you would still have your original CAD balance in your account (plus the positive USD won in the trades).   
 

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