Comments on: How to Make a “Wash” Trade http://www.canadiancapitalist.com/how-to-make-a-wash-trade/ Helping you invest and prosper Sat, 11 Feb 2012 19:27:54 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: » Buying U.S. securities: currency fees Canadian Business Blogs | Advice on Investment in Canada, Stock Market, Small Businesses Opportunities http://www.canadiancapitalist.com/how-to-make-a-wash-trade/#comment-216417 » Buying U.S. securities: currency fees Canadian Business Blogs | Advice on Investment in Canada, Stock Market, Small Businesses Opportunities Sat, 17 Apr 2010 14:52:26 +0000 http://www.canadiancapitalist.com/2006/08/28/how-to-make-a-wash-trade#comment-216417 [...] TD Waterhouse, currently offer “wash trades” as a way to reduce fees paid. As mentioned on Canadian Capitalist, this technique involves purchasing a U.S. Money Market Fund to proxy a U.S. cash balance in the [...] [...] TD Waterhouse, currently offer “wash trades” as a way to reduce fees paid. As mentioned on Canadian Capitalist, this technique involves purchasing a U.S. Money Market Fund to proxy a U.S. cash balance in the [...]

]]> By: Iwonder http://www.canadiancapitalist.com/how-to-make-a-wash-trade/#comment-172540 Iwonder Tue, 09 Dec 2008 18:47:50 +0000 http://www.canadiancapitalist.com/2006/08/28/how-to-make-a-wash-trade#comment-172540 From my own experiences, TD Waterhouse automatically washes the trade when you buy and sell a US stock on the same day. When you do so, the lower amount of the two orders receives the exchange rate of the higher amount. This way you get the wash trade but TD keeps their exchange rate premium on any difference in amount between the buy and sell amounts. For example, here the sell order receives the exchange rate of the buy order: Sell stock A shares for $10,000 US @23% US PREM = $12,300 CDN Buy stock B shares for $12,000 US @25.2% US PREM = $-15,024 CDN After settlement you'll see this transaction: Cancel (CXL) stock A sale of $10,000 US @23% US PREM = $-12,300 CDN Sell stock A for $10,000 US @25.2% US PREM = $12,520 CDN Or the reverse situation where the buy order receives the exchange rate of the sell order: Sell stock C shares for $20,000 US @23% US PREM = $24,600 CDN Buy stock D shares for $10,000 US @25.2% US PREM = $-12,520 CDN After settlement you'll see this transaction: Cancel (CXL) stock D buy of $10,000 US @25.2% US PREM = $12,520 CDN Buy stock A for $10,000 US @23% US PREM = $-12,300 CDN From my own experiences, TD Waterhouse automatically washes the trade when you buy and sell a US stock on the same day. When you do so, the lower amount of the two orders receives the exchange rate of the higher amount. This way you get the wash trade but TD keeps their exchange rate premium on any difference in amount between the buy and sell amounts.

For example, here the sell order receives the exchange rate of the buy order:

Sell stock A shares for $10,000 US @23% US PREM = $12,300 CDN
Buy stock B shares for $12,000 US @25.2% US PREM = $-15,024 CDN
After settlement you’ll see this transaction:
Cancel (CXL) stock A sale of $10,000 US @23% US PREM = $-12,300 CDN
Sell stock A for $10,000 US @25.2% US PREM = $12,520 CDN

Or the reverse situation where the buy order receives the exchange rate of the sell order:

Sell stock C shares for $20,000 US @23% US PREM = $24,600 CDN
Buy stock D shares for $10,000 US @25.2% US PREM = $-12,520 CDN
After settlement you’ll see this transaction:
Cancel (CXL) stock D buy of $10,000 US @25.2% US PREM = $12,520 CDN
Buy stock A for $10,000 US @23% US PREM = $-12,300 CDN

]]> By: Frank http://www.canadiancapitalist.com/how-to-make-a-wash-trade/#comment-151180 Frank Thu, 28 Aug 2008 22:55:40 +0000 http://www.canadiancapitalist.com/2006/08/28/how-to-make-a-wash-trade#comment-151180 I'm considering moving to Questrade just for the benefit of holdings US funds in an RRSP account. It's costing my 1-2% per month to say with my current broker - BMO Investor Line to settle my trades in CDN and buy back again. I make about 4 trades per month. BMO has great service and great platform though the money savings are very tempting. I cannot understand what is taking them so long to offer this feature to hold US funds??? Speaking with their rep, they tell me it's in progress... same thing they mentioned months ago. Anyone know of any other brokerages who offer US funds in RRSP or will offer it soon. Any advice and feedback is appreciated. I’m considering moving to Questrade just for the benefit of holdings US funds in an RRSP account. It’s costing my 1-2% per month to say with my current broker – BMO Investor Line to settle my trades in CDN and buy back again. I make about 4 trades per month.

BMO has great service and great platform though the money savings are very tempting. I cannot understand what is taking them so long to offer this feature to hold US funds??? Speaking with their rep, they tell me it’s in progress… same thing they mentioned months ago.

Anyone know of any other brokerages who offer US funds in RRSP or will offer it soon.

Any advice and feedback is appreciated.

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/how-to-make-a-wash-trade/#comment-131503 Canadian Capitalist Fri, 02 May 2008 18:15:53 +0000 http://www.canadiancapitalist.com/2006/08/28/how-to-make-a-wash-trade#comment-131503 Gordon: Did you buy a US stock and sell it on the same day with TD Waterhouse? If you did, the premium refers to the exchange rate. Let's say during the sell TDW calculated an exchange rate of 1 USD = 1.015 CAD. It would show up as a "CONVERT TO CDN @1.5%" transaction. Now, when you buy and TDW calculates the exchange rate of 1 USD = 1.035 CAD. At this point, the trades haven't been washed. A day or two later, TDW adjusts one of the transactions to use the same exchange rate on both the buy and the sell. Check your statement to see that it is actually done and if not call them and they should fix it for you. Gordon: Did you buy a US stock and sell it on the same day with TD Waterhouse? If you did, the premium refers to the exchange rate. Let’s say during the sell TDW calculated an exchange rate of 1 USD = 1.015 CAD. It would show up as a “CONVERT TO CDN @1.5%” transaction. Now, when you buy and TDW calculates the exchange rate of 1 USD = 1.035 CAD. At this point, the trades haven’t been washed.

A day or two later, TDW adjusts one of the transactions to use the same exchange rate on both the buy and the sell. Check your statement to see that it is actually done and if not call them and they should fix it for you.

]]> By: Gordon Wehen http://www.canadiancapitalist.com/how-to-make-a-wash-trade/#comment-131502 Gordon Wehen Fri, 02 May 2008 17:47:35 +0000 http://www.canadiancapitalist.com/2006/08/28/how-to-make-a-wash-trade#comment-131502 Can anyone explain what does it mean by 'Premium on US funds' on the wash trade transaction ? I noticed that 'premium' is on both my 'in' and 'out' wash trades.. and I actually loss about 4% resulting from the exchange with the 'premium' factored in. Can anyone explain what does it mean by ‘Premium on US funds’ on the wash trade transaction ? I noticed that ‘premium’ is on both my ‘in’ and ‘out’ wash trades.. and I actually loss about 4% resulting from the exchange with the ‘premium’ factored in.

]]> By: augustabound http://www.canadiancapitalist.com/how-to-make-a-wash-trade/#comment-114426 augustabound Sat, 16 Feb 2008 15:25:44 +0000 http://www.canadiancapitalist.com/2006/08/28/how-to-make-a-wash-trade#comment-114426 Sorry again, I just realized the CDN$ would have been higher at the time. My mistake. lol Sorry again, I just realized the CDN$ would have been higher at the time. My mistake. lol

]]> By: augustabound http://www.canadiancapitalist.com/how-to-make-a-wash-trade/#comment-113015 augustabound Wed, 13 Feb 2008 16:22:49 +0000 http://www.canadiancapitalist.com/2006/08/28/how-to-make-a-wash-trade#comment-113015 Sorry, just read your January 10th post on Questrade offering US$RRSP. I'm a bit behind on my blog reading. lol Sorry, just read your January 10th post on Questrade offering US$RRSP. I’m a bit behind on my blog reading. lol

]]> By: augustabound http://www.canadiancapitalist.com/how-to-make-a-wash-trade/#comment-113004 augustabound Wed, 13 Feb 2008 15:50:35 +0000 http://www.canadiancapitalist.com/2006/08/28/how-to-make-a-wash-trade#comment-113004 CC, wouldn't the spread work the other way? In your example the spread actually lowers your cost, would it not be $19*0.99*1.005? I thought I saw that Questrade now offers wash trades as of about a week ago. Maybe Emil can confirm this? Thanks to all CC, wouldn’t the spread work the other way?
In your example the spread actually lowers your cost, would it not be $19*0.99*1.005?

I thought I saw that Questrade now offers wash trades as of about a week ago. Maybe Emil can confirm this?

Thanks to all

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/how-to-make-a-wash-trade/#comment-111391 Canadian Capitalist Fri, 08 Feb 2008 22:07:37 +0000 http://www.canadiancapitalist.com/2006/08/28/how-to-make-a-wash-trade#comment-111391 Hi Tope: 1 basis point is a fancy term for 0.01%. In the example you have cited, though the business news might report the dollar at 99 cents, retail investors don't get that rate. Brokerages build in a spread, i.e. sell to you at a higher price and buy from you at a lower price. According to Emil, Questrade's spread is 0.5%. In your example, ORCL in C$ will be $18.715 ($19 * 0.99 * 0.995). Hope this helps. Hi Tope:

1 basis point is a fancy term for 0.01%. In the example you have cited, though the business news might report the dollar at 99 cents, retail investors don’t get that rate. Brokerages build in a spread, i.e. sell to you at a higher price and buy from you at a lower price. According to Emil, Questrade’s spread is 0.5%. In your example, ORCL in C$ will be $18.715 ($19 * 0.99 * 0.995). Hope this helps.

]]> By: Tope http://www.canadiancapitalist.com/how-to-make-a-wash-trade/#comment-111385 Tope Fri, 08 Feb 2008 20:46:25 +0000 http://www.canadiancapitalist.com/2006/08/28/how-to-make-a-wash-trade#comment-111385 Hi Emil Can you pls. explain what 50 basis points mean. as a e.g. I have a trade for 100 stock of ORCL at $19.00 How much canadian $ will it be at current market rate of 1 us$ = 0.99C$. What will be the 50 bsis point in this transaction ? Thanks Hi Emil

Can you pls. explain what 50 basis points mean. as a e.g. I have a trade for 100 stock of ORCL at $19.00 How much canadian $ will it be at current market rate of 1 us$ = 0.99C$.

What will be the 50 bsis point in this transaction ?

Thanks

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