Grow your investments with American stocks

How to exchange currency in Questrade (To buy US stocks)

If you’re a Canadian interested in US stock, you likely have heard a thing or two about the brokerage, Questrade.

Exchange CAD to USD or USD to CAD without fee

Whether you’re already using their app or have yet to get your feet wet, after reading this post, you’ll know how easy and inexpensive it is to trade US stocks from Canada.

First, we’ll explore the benefits of investing in US stocks. Then we’ll go into the specifics of how to buy it online using Questrade, including how to exchange your Canadian dollars for US dollars (CAD to USD) to maximize your profits.

Why invest in US stocks?

If you’ve yet to invest in US stocks, there are many reasons why so many Canadians do it. For starters, here are three big reasons:

The USA has the top two largest stock markets in the world —NYSE and NASDAQ.

Investing in US stocks allows you to invest in some of the world's biggest companies, such as Microsoft and Apple. US stocks offer a way for Canadians to diversify their portfolio.

Until recently, Questrade has offered one of the best ways to buy US stocks using a Canadian account, largely because of its reasonable fees and the fact that it allows you to keep US dollars overnight, unlike WealthSimple.

How to buy US stocks using Questrade

Say you want to buy some Tesla stock, which is a US stock (and not a Canadian stock). Let’s pretend you only have money in your Canadian account. There are a few main ways to go about this.

It’ll depend on whether you have a registered account (like TFSA) or a non-registered account.

First, if you have a registered account, Questrade will convert your money automatically.

By trading Tesla stock (or any US stock or ETF for that matter), you let Questrade convert the currency from CAD to USD at whatever rates they charge. They generally charge about 1.5-1.99%. Then you also accept whatever the Questrade exchange rate is, even if it’s not the most competitive.

Though this route is very convenient, it’s not the most cost-efficient (more on that later).

An alternative way to do it is that you can trade US stocks on margin. Let me clarify. When you trade using margin, you essentially trade with borrowed money. Even though you have CAD, Questrade will borrow the cost of Tesla in US dollars for you and you will pay interest on that US dollar balance.

Let’s say you have $5000 CAD in your account and you buy $1000 worth of Tesla stock. Even though you have the money in your Canadian account to buy Tesla stock, Questrade will borrow US money and leave your Canadian account untouched.

You will, of course, pay interest on the borrowed money. Again, this isn’t the most cost-effective way to buy US stocks.

An alternative way to buy US stocks on Questrade

An alternative way to buy US stocks is by funding your Questrade account with USD.

Let’s expand.

First, you’ll need a US bank account which is easy to get if you live in Canada. We’ve covered multiple options for opening a USD account from Canada.

When you’re trading only ten dollars or so, 1.99% in fees may not feel like a big deal. However, once you start getting serious about trading, you’ll be kicking yourself for not doing more research in the beginning.

Questrade rates of 1.5%-1.99% may not seem like a lot at first, especially compared to what banks and credit cards tend to charge (about 2.5%), but once you’ve traded $5000, you’ve already lost about $100 in profit. That’s a fancy dinner for two you’re missing out on simply for not knowing another way to exchange your CAD to USD.

You also don’t have a choice but to use the Questrade CAD to USD exchange rate, which is more money that you will be losing out on.

Fortunately, there’s a way to save on exchange costs. The newly released Remitbee Currency exchange charges you zero fees and has very competitive exchange rates when you convert your Canadian dollars to US dollars. Check out the CAD to USD rates for yourself.

With Remitbee, you can exchange up to $50,000 a day with no hidden fees. And it only takes 2-3 business days for the exchange to take place.

Once you open a US bank account and transfer money from your Canadian account using Remitbee, here’s a step-by-step tutorial on how to connect your USD account to Questrade to start maximizing profits when you trade US stocks. (note: the example uses CIBC, but it’s a similar process for other banks).

Step-by-step tutorial: Connect your USD account to Questrade

Click Pre-authorized deposits.

questrade instructions

Next, add a new account.

questrade instructions

Click Setup manually

questrade instructions

Click continue. “Connecting with CIBC” screen will pop up.

questrade instructions

Choose how much would you want to transfer

questrade instructions

Reference id.

questrade instructions

Now you may also be wondering, “how long does it take to exchange funds in Questrade?” This can take up to 2 business days.

It’s that easy and quick!

Final thoughts

Questrade offers one of the best ways to trade US stocks for Canadians and recently provided some of the better rates for CAD/USD. The newly released Remitbee Currency Exchange is an alternative way to convert your money so that you can trade US stocks using Questrade and save extra money. Every dollar counts when it comes to investing.

Feel comfort knowing Remitbee currency exchange is regulated and audited by FINTRAC. To get started exchanging your CAD to USD or USD to CAD, sign up here.

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