Questrade - US stocks precaution - warning - RedFlagDeals.com Forums (2025)

Maybe its just me, but I found this out the hard way. If you are using Questrade, you probably funded it with Canadian dollars like I did.

Lately, I have been buying some US stocks, bought and sold them just fine, earning some small profits. I thought it would automatically deduct the Cdn equivalent amount, according to their daily US exchange rate. Well, turns out it isn't like that at all.

Here's what Questrade does:

- buy US stock with Canadian money, cost = $5000 Cdn
- Questrade does not convert anything, but lends me the USD
- Cnd account does not get $5000 or anything deducted
- USD account (in Questrade) now has a negative balance
- of course, nothing is free in life, they charge an interest on this negative balance at their interest rate (USD prime + 1.75%? see website)

So, after finding this out today, I quickly had to convert (BUY USD) some Cdn Dollar from my Cdn account in Questrade; to avoid more interest charges on the negative balance. Lesson learned.

Maybe this is my first time having a margin account, so I never knew they wouldn't use money from my Cdn account to buy the US stocks for me. I had other trading accounts and that's what they would do. Or it would prompt me saying "No US funds, fund from Cdn account??"

So, maybe will help you as well. Best thing is, convert a chunk of Cdn to USD in Questrade then, trade with that.

When I was messaging with Questrade help today, he/she said, it doesn't automatically convert because clients want to control when they convert (eg. wait till Cdn dollar is higher). I'm thinking ya right, more like Questrade wants to lend me the money, so they can start charging interest.

rfdrfd wrote: ↑Maybe its just me, but I found this out the hard way. If you are using Questrade, you probably funded it with Canadian dollars like I did.

Lately, I have been buying some US stocks, bought and sold them just fine, earning some small profits. I thought it would automatically deduct the Cdn equivalent amount, according to their daily US exchange rate. Well, turns out it isn't like that at all.

Here's what Questrade does:

- buy US stock with Canadian money, cost = $5000 Cdn
- Questrade does not convert anything, but lends me the USD
- Cnd account does not get $5000 or anything deducted
- USD account (in Questrade) now has a negative balance
- of course, nothing is free in life, they charge an interest on this negative balance at their interest rate (USD prime + 1.75%? see website)

So, after finding this out today, I quickly had to convert (BUY USD) some Cdn Dollar from my Cdn account in Questrade; to avoid more interest charges on the negative balance. Lesson learned.

Maybe this is my first time having a margin account, so I never knew they wouldn't use money from my Cdn account to buy the US stocks for me. I had other trading accounts and that's what they would do. Or it would prompt me saying "No US funds, fund from Cdn account??"

So, maybe will help you as well. Best thing is, convert a chunk of Cdn to USD in Questrade then, trade with that.

When I was messaging with Questrade help today, he/she said, it doesn't automatically convert because clients want to control when they convert (eg. wait till Cdn dollar is higher). I'm thinking ya right, more like Questrade wants to lend me the money, so they can start charging interest.

Margin interest doesn't start to accrue until settlement of that particular trade.
So you can always buy on margin and then when you see the DR the next day then just convert the exact amount of CDN funds necessary to cover the DR balance.
I've done this a few times and escaped any charges.

4.75% per annum on the USD margin balance so even a DR balance of $10,000 US held for 2 weeks would cost you around $18 so its not a huge fee but it's definetly worth avoiding if you plan to only spend your own cash.

You gotta keep an eye on your QT account and don't be afraid to ask questions.
They got some strange ways of doing some things and it's best not to give them too much rope...

rfdrfd wrote: ↑Maybe its just me, but I found this out the hard way. If you are using Questrade, you probably funded it with Canadian dollars like I did.

Lately, I have been buying some US stocks, bought and sold them just fine, earning some small profits. I thought it would automatically deduct the Cdn equivalent amount, according to their daily US exchange rate. Well, turns out it isn't like that at all.

Here's what Questrade does:

- buy US stock with Canadian money, cost = $5000 Cdn
- Questrade does not convert anything, but lends me the USD
- Cnd account does not get $5000 or anything deducted
- USD account (in Questrade) now has a negative balance
- of course, nothing is free in life, they charge an interest on this negative balance at their interest rate (USD prime + 1.75%? see website)

So, after finding this out today, I quickly had to convert (BUY USD) some Cdn Dollar from my Cdn account in Questrade; to avoid more interest charges on the negative balance. Lesson learned.

Maybe this is my first time having a margin account, so I never knew they wouldn't use money from my Cdn account to buy the US stocks for me. I had other trading accounts and that's what they would do. Or it would prompt me saying "No US funds, fund from Cdn account??"

So, maybe will help you as well. Best thing is, convert a chunk of Cdn to USD in Questrade then, trade with that.

When I was messaging with Questrade help today, he/she said, it doesn't automatically convert because clients want to control when they convert (eg. wait till Cdn dollar is higher). I'm thinking ya right, more like Questrade wants to lend me the money, so they can start charging interest.

I kinda agree with Questrade on this reason, at least that's one of the reasons why I keep my USD in deficit. Going to clear the deficit when the Canadian dollar gets stronger again.

Some ppl go with Questrade for this function because they don't want every trade automatically converted.

Many clients with TD try to avoid this by using wash trades.

You may not want it but I like having the control over forex transaction, just because you didn't know doesn't mean they are wrong.

That is exactly how a multi-currency margin account should work. You buy USD securities so the cost is deducted from your USD balance (which may put it below zero). If you were to buy CAD securities it would be funded from the CAD balance. Automatic conversion would be very bad since it takes the control of forex out of your hand and subjects you to unnecessary forex spread.

Furthermore, if you really think how it could automatically deduct from the another currency, it becomes complicated. What if you have some USD, but not enough to cover? Should it use that USD, and then some CAD? What if you don't have enough CAD + USD cash to cover the trade - which currency should go negative? CAD? USD? Some mix of both?

Using the actual currency of the underlying sale is always the best approach, since it subjects you to no forced conversion, and you can always immediately after do any forex manipulation you want without paying a cent of interest, as was pointed out above.

BTW, when you have registered accounts, you cannot have margins so they convert automatically if you buy US securities and you don'T have USD in your account.

But when selling they don't convert it back until you do it yourself, which is good to buy other US securities.

I really like questrade, it's daunting at first but once you get the hang of it it's nice.

rfdrfd wrote: ↑Maybe its just me, but I found this out the hard way. If you are using Questrade, you probably funded it with Canadian dollars like I did.

Lately, I have been buying some US stocks, bought and sold them just fine, earning some small profits. I thought it would automatically deduct the Cdn equivalent amount, according to their daily US exchange rate. Well, turns out it isn't like that at all.

Here's what Questrade does:

- buy US stock with Canadian money, cost = $5000 Cdn
- Questrade does not convert anything, but lends me the USD
- Cnd account does not get $5000 or anything deducted
- USD account (in Questrade) now has a negative balance
- of course, nothing is free in life, they charge an interest on this negative balance at their interest rate (USD prime + 1.75%? see website)

So, after finding this out today, I quickly had to convert (BUY USD) some Cdn Dollar from my Cdn account in Questrade; to avoid more interest charges on the negative balance. Lesson learned.

Maybe this is my first time having a margin account, so I never knew they wouldn't use money from my Cdn account to buy the US stocks for me. I had other trading accounts and that's what they would do. Or it would prompt me saying "No US funds, fund from Cdn account??"

So, maybe will help you as well. Best thing is, convert a chunk of Cdn to USD in Questrade then, trade with that.

When I was messaging with Questrade help today, he/she said, it doesn't automatically convert because clients want to control when they convert (eg. wait till Cdn dollar is higher). I'm thinking ya right, more like Questrade wants to lend me the money, so they can start charging interest.

I agree, QT should prompt their clients about US funds when they buy US stocks, ask them what to do by showing them their options (convert some chunk of CAD to US and keep it that way, one time exchange to cover the trading amount, opening separate US dollar trading account, etc).

lhsonic wrote: ↑This sounds fair to me. I switched my registered account to this program, known as "trade currency" settlements. This way, there is only a currency conversion taking place when you want one. Before, QT was auto-converting my funds for me upon settlement and I was losing out big time because I'd sell US stocks to CAD and then re-buy other US stocks the next day. Each trade cost me in FX conversions. Now, I exchange currency before I need to buy and pull currency out in USD and exchange using ING which offers more favourable rates.

Registered trading accounts have different policy as per CRA regulations. AFAIK, registered account are not allowed to carry borrowed money so this is not the case here. QT should inform their clients about lack of US funds instead of automatically opening a borrowing amount without client's consent. I think QT hide this like a short sighted opportunist business to make more money.

evoviii wrote: ↑Some ppl go with Questrade for this function because they don't want every trade automatically converted.

Many clients with TD try to avoid this by using wash trades.

You may not want it but I like having the control over forex transaction, just because you didn't know doesn't mean they are wrong.

I think QT is wrong on this. QT should inform their clients about the process and client should know what and how much they are paying for. A US dollar trading account, a fund allocation within the same account, an option for one time payment from CAD funds, a conversion for long time US stocks traders, etc can easily resolve OP's concern. Otherwise QT may charge interest (and will do believe me) forever or until you buy equivalent US funds. It does not matter if you sell your US stocks next day as they will keep your "borrowed US funds" in negative territory which is subject to interest charges. Is it legal? I do not know. Is it unethical? IMO a big YES. This is to me kind of stealing their customers money without a clear customer consent. Shame on Questrade.

This is pretty common amongst most brokerage firms isn't it?

Could you imagine how quickly you could lose money on FX spreads if the converted every US transaction in and out of Canadian currency. You'd lose way more than the interest they are charging you? It would completely decimate profits of people who do any kind of frequent trading of US securities.

zod wrote: ↑This is pretty common amongst most brokerage firms isn't it?

Could you imagine how quickly you could lose money on FX spreads if the converted every US transaction in and out of Canadian currency. You'd lose way more than the interest they are charging you? It would completely decimate profits of people who do any kind of frequent trading of US securities.

I think QT could have done a better job to inform and educate new clients based on complaints from previous clients. They basically send you a link with bunch of information and expect you to understand everything or to call their non existed service desk. For novice investors, it's not easy to comprehend contract details, procedures, yet alone to make an educated guess or decision on fund exchanges. Most new investors do not know about this forced borrowing of USD funds when they trade US stocks while they have more than enough CAD funds to fully cover their trades. I personally thought I paid a one time fee for exchange as all of my trades were in US markets. QT's reporting format of balances, combined USD and CAD funds, trade history columns, etc make it difficult to find out borrowed amount and allocated interest charges. For example, when you try trade history, it shows the dividend amount but does not show interest and you may easy guess you do not pay interest because you did not use any margin.

I think it is preferable for QT if their new clients do not convert CAD to USD as they will charge interest forever, yes FOREVER! Even you do not trade, even you have tons of CAD funds waiting idle with "0" interest. They do not warn their clients properly about the interest they are charging for and people assume they pay interest to margins, the one they borrowed when they do not have cash to cover their positions. QT meanwhile making a heck a lot of profit with almost zero risk as they hold client's CAD funds.

Hope IIROC and other regulatory bodies will punish them for their unfair business practices. I will cross my finger.

Beware of Questrade!