GDAX vs Coinbase
GDAX (Global Digital Asset Exchange) is Coinbase’s own exchange. GDAX offers a number of advanced functions not available on Coinbase and allows you to trade for much cheaper fees. Getting started with GDAX can be intimidating especially if you are a beginner, this ultimate GDAX guide will allow you to trade on the exchange with confidence. We will be running through all the common queries from signing up, buying and selling to understanding the charts and interface.
Whilst GDAX does offer lower fees and a more powerful trading platform a word of warning to total beginners, there is more to understand with GDAX and it is easier to make mistakes compared to Coinbase. So if you have never traded before we would suggest getting a number of trades under your belt on Coinbase first to build up confidence and experience. Also please remember we are not financial advisers and this should not be taken as financial advice, make sure you understand all the risks before getting involved in Cryptocurrency.
Registering with GDAX
If you are an existing Coinbase user, good news since when you register for a Coinbase account you automatically get a GDAX account. Simply head over to GDAX.com and log on with the same username and password you would use for Coinbase. If you have two factor authentication enabled for Coinbase you will need this code. Depending on the identification you used to register for Coinbase you may be asked for additional identification, you should then get immediate access to your account.
If you don’t have a Coinbase account you will need to register here first. If you use this link you will get $10 worth of free Bitcoin when you buy your first $100 of Bitcoin. When you have completed the initial information on the sign up link you will be prompted to provide some ID for verification. Which can be an ID card, passport or drivers licence. Check out the Coinbase website for a full list of accepted forms of identification. The sign up process is simple and only takes about 5 minutes. Once you are registered it would be sensible to enable two factor authentication in the interest of making your account more secure.
Logging into GDAX
To sign into GDAX simply head to GDAX.com and click sign in, remember the username / password and two factor authentication method will all be the same as your Coinbase account.
The cryptocurrencies currently available for trading are:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Ethereum (ETH)
- Litecoin (LTC)
Understanding the layout
When you first login you will be greeted by the trading screen below. If you don’t see this screen click on the menu at the top right and choose trading. When you first see the screen you’re either going to have sweaty palms and think what the hell does all this mean or you are going to feel like the Wolf of Wall Street and be wanting to shout buy, sell and feel like putting on red braces. Either way we got you in this GDAX complete beginners guide.
First let’s take a quick look around the screen to get familiar with the main interface, then we will dive into each section in more detail.
GDAX Navigation Bar
The top of the page holds key pricing data and the anchor for the main menu
- Trading pairs can be selected by clicking on the top left dropdown. This allows you to choose from cryptocurrencies Bitcoin, Litecoin, Bitcoin Cash, Ethereum and the Fiat currency you wish to buy it in for example Euros or Dollars.
- Based on the currency pair you have chosen you will see the last traded price, change in price over 24 hours and the volume of trades.
The main work area of the GDAX. Used to buy and sell cryptocurrencies plus move money into and out of your account
- Deposit – here you can deposit funds into your account
- Withdraw – this is used to move funds out of your account
- Buy – this is where you can buy one of the four available cryptocurrencies; Bitcoin, Litecoin, Bitcoin Cash, Ethereum
- Sell – this is used to sell your cryptocurrencies. Again this can be a market or limit sell
This area shows the open buy and sell orders on the exchange
- Red numbers – Represent the sell orders
- Green numbers – represent the buy orders
Graphical representation of recent movements in the market
- Price chart – Shows for change in price over a period of time
- Depth chart – shows the number of buyers and sellers at various prices
Trade history shows orders that have recently executed. Again similar to the rest of the interface buy trades are shown in green and sells in red.
Now let’s look at each area in turn to get a greater understanding of how to use GDAX
The first thing you will need to do whether you wish to buy or sell is choose the trading pair. This essentially allows you to choose the cryptocurrency you wish to purchase and which fiat currency you wish to use to pay for the trade. Fiat currency is your traditional government backed currency such as the US dollars. You can also use Bitcoin to fund the purchases.
The cyptocurrencies available for purchase on GDAX are currently Bitcoin (BTC), Litecoin LTC, Bitcoin Cash (BCH) and Ethereum (ETH). If you wish to buy other cryptocurrencies not listed here you would need to use an exchange such as Binance. The trading pairs available will depend on your region and you will generally want to select your local currency. For example in the USA you would want to select Dollars and in Europe you would wish to select Euros. Let’s look at some example pairings.
US Trading Pairs
- BTC /USD – Bitcoin / US dollars, ie buy Bitcoin with US dollars
- BCH /USD – Bitcoin cash / US dollars
- ETH /USD – Ethereum / US dollars
- LTC /USD – Litecoin / US dollars
European Trading Pairs
- BTC /EUR – Bitcoin / Euros, ie buy Bitcoin with Euros
- BCH /EUR – Bitcoin cash / Euros
- ETH /EUR – Ethereum / Euros
- LTC /EUR- Litecoin / Euros
Bitcoin can also be used to fund the purchase of other cryptocurrencies. So for example you could have a pair of LTC / BTC which would be the purchase of Litecoin using Bitcoin.
So choose the pairing you want and let’s proceed to the next stage to deposit funds.
Depositing Funds into GDAX
Ensure that you have chosen your trading pair before proceeding to this depositing stage, since the trading pair you choose will influence what you see in the deposit window.
The deposit funds window contains three different methods to transfer in funds; these are bank transfer, Coinbase account and Bitcoin address. Let’s look at how each works in turn:
Bank transfer – Bank transfer allows you to transfer funds from your standard bank account into Coinbase / GDAX. Residents of the US will see the screen below whilst those in Europe will see the screen above. The bank account screen allows you to register a bank account and then use this linked account to transfer money in and out. The Bank account method will take 3-5 business days. If you wish to use a bank account but need the funds quicker you can use a wire transfer to receive the deposit the same day. When you click on Bank Wire you will see all the details you need to enter at your bank to initiate a wire. UK customers may wish to read eliminating SEPA international banking fees when transferring into Coinbase.
European customers who wish to transfer money in via a bank account will need to click on the SEPA tab in the deposit window. Once you have clicked on deposit click on the SEPA tab and take a note of the details on screen, then set up a payment from your bank account to the account listed ensuring you include the reference number.
Coinbase account – if you already have funds in your Coinbase account you can pull this across for use on GDAX by selecting deposit, Coinbase account, entering the amount and then clicking deposit funds.
BTC Address – If you open up the Bitcoin tab you will see a Bitcoin address. You can use this address to send funds from your chosen wallet to your GDAX account. As mentioned earlier what you see in the deposit window is contextual to what you select in the trading pair, so if you chose BTC / LTC you would then also get a tab showing your Litecoin address which you could use to send Litecoin funds. It is worth noting however only Bitcoin can be used to purchase other cryptocurrencies and not the other way round, so you could not use Litecoin to purchase Bitcoin for example. When depositing any other cryptocurrency apart from Bitcoin into your Coinbase account you are just using it as an online wallet, probably not recommended for large amounts.
Withdrawing funds is the exact opposite process of depositing and has the same options available. You can withdraw to a bank account, Coinbase wallet or to a cryptocurrency address. You would use a cryptocurrency address to store your coins in another wallet.
The order book shows currently active buy and sell orders in the market. The buys shown in green on top and below this are the the sell orders in red. You can think of the order book as representing supply and demand. The sells are people offering their coins for sale on the exchange and supplying the demand for those that wish to make a purchase. For each price level you will see a market size, this is a measure of the number of coins that are for sale or demanded at that price. For example in the Bitcoin order book shown in the screenshot above you can see 2.4 bitcoins are available for sale at 7150.00 EUR, if a matching buy order comes in for Bitcoin at 7150.00 EUR this will reduce the market size for a moment. GDAX is a busy exchange so you will see the order book changing quickly.
In between the buys and sells you can see the spread which measures the difference between the lowest sell order and the highest buy order. If the number is low this indicates the markets are relatively well matched between buying and selling, making a liquid market and therefore a healthy exchange.
The price chart is pretty self-explanatory, it shows the value of the coin over time. Time ranges available are from one minute to one day. The standard chart type is candle if you prefer the line chart this is also available. The following chart shows an example line price chart this time set with a time period of one day.
Below both types of price chart you can see the volume associated with that price activity. The charts are interactive so hover over any area you want more accurate pricing for.
The depth chart visually shows the same thing as the order book i.e. at each price point how many are willing to buy and sell. Like many parts of the GDAX interface the screen is clearly split with buy orders being shown in green on the left and sell orders in red on the right. The chart shows the number of buyers to the number of sellers in the market, or you can think of it as supply and demand. Along the bottom is the price of the coin and the vertical Y axis shows the number of coins being demanded at that level.
So reading the chart above we can see for example that at a sell price of 7200 EUR approximately 40 Bitcoins are on the order books available for sale. If you want an exact figure you can hover over the point you are interested in and it will tell you the exact price and the number of coins available at this price and the total value of all those coins i.e. the price * number of coins available.
This area of the screen will show any open orders that you have. In the example screenshot you can see an open limit order for one Bitcoin at $1,000 ( wishful thinking). If the price met that set in the limit order the order would move from the order section to fills. If the order conditions were not met it would remain in orders, in this case of wanting a Bitcoin for $1,000 it will probably remain open for a very long time.
The name of the trading history screen can be a little confusing since it may sound like this is your personal order history, it is not. The trade history area of the screen shows orders on the exchange that have been completed. Orders will start off on the order book when open and move to the trade history screen when completed.
GDAX Market Order
For those of you reading this thinking when can I just get on and buy some crypto, good news because that’s now. We are going to start off with the easiest method which is a market buy. Market buys are simple to understand, you enter the amount you wish spend in the currency funding the transaction, the screen shows you the amount of the coin this will allow you to buy and if you are then happy you click place buy order. The screen below shows we can buy 0.49 Litecoin’s for $100.
Let’s run through a practical example. We wish to buy $100 of Litecoin
1 First we would select the trading pair of LTC / USD
2 Next we enter the amount we want to buy in terms of the currency we are using to fund the transaction. In this case we want to buy $100 worth of Litecoin so we enter 100.
3 The exchange then calculates the amount of Litecoin this will allow us to buy, we can see in this case it is 0.49 Litecoin just under half a Litecoin. If you are happy with this price then simply click place buy order.
Advantages of a market order are they complete almost instantly and are the simplest to do.
Creating a Market Sell order is just as simple we enter the trading pair to select the coin we wish to sell then simply enter the amount of these coins we wish to sell. Below we have chosen the pairing of LTC / EUR, we enter the number of coins we wish to sell and the screen then updates to tell us the total amount we will receive for the sale. Below we are selling 1 Litecoin for 146.42 Euros.
Market Order vs Limit orders
We have just run through an example of a market order. A market order is simply buying the cryptocurrency at its current price, you can think of it as like the buy now button in eBay or walking into a shop and paying the price on the shelf. You’re basically saying I am happy to make a purchase /sale of this cryptocurrency at the current price. This is also known as a market taker order since you are simply accepting the price given and paying it.
With a limit order you specify a price you are willing to pay. This is a little like going into a shop and haggling or bargaining. You are not simply accepting the price on the shelf you are suggesting the price and offering it up to any takers. In this case you are a market maker since you are creating an offer and seeing if someone accepts it.
The cheapest way to trade cryptocurrencies is through a limit order since this has zero fees.
GDAX Limit Order
Let’s run through a practical example. Imagine the price of Litecoin today is $200, we are not willing to purchase at $200 but we think good value would be at $180. So we put in a limit order of $180, if the price falls to $180 the purchase is made automatically for us. In this way we are becoming the market maker we are not simply buying at the market rate as in a market order but creating an offer of value and seeing if there are any takers.
Advantages of a limit order are there are zero fees, second of all it allows you to take advantage of some of the volatility in the crypto market. Again say we wish to purchase Litecoin and the current market value is $200 per Litecoin we could put in a limit order of $199. This means if the price does fall to $199 we have got the trade for no fees and slightly below what was the current market rate when we first looked.
What we choose to set the limit order at will depend on how quickly we want the order to go through and what our motivations are. If we are happy to pay for market rate but just wish to get zero fees we can do a limit order and simply click on the order of the top of the order book and this will populate the limit order with the current buy price, this should go through fairly quickly. If however we are not motivated by getting the current price as quick as possible and are willing to chance that the price will go lower we can set a limit order somewhat below the market price and see if it executes. If a price does not go as low as the limit order the trade would not take place.
Let’s run through an example of a limit order and then discuss some of the advanced options available.
We wish to buy 2 Litecoin’s using Euros and the current market price for Litecoins is 147 Euros. We want to pay zero fees but think this is a good price for Litecoins so wish to purchase quickly.
1 First ensure the correct trading pair has been selected in this case LTC / EUR
2 Under limit price enter the price you are willing to pay for the coin. We look at the top of the buy order books and see the price is 147 Euros. We think this is good value so to ensure this goes through quickly enter 147 in the limit price
3 Next we enter the number of coins we are willing to purchase at that price so in amount we put 2. Double check all the information you have entered is correct and then click place buy order
This is how you place a standard limit order. It is also possible to use advanced options with limit orders. You will see the advanced drop down box just above the place order button.
The advanced options available to us are as follows:
- Good till cancelled – This kind of order will sit on the books indefinitely, until the order is filled or you decide to cancel it if the price is never heard. This is the default
- Good till time – This allows you to keep the order on the books for a specified length of time. For example in the screen shot below we have a limit that will execute if the coin hits the value specified within one day or the order will cancel itself.
- Immediate or cancel – Does what it says on the tin if the order cannot be met immediately it will be cancelled
- Fill or kill – Very similar to the immediate or cancel order, this order will attempt to buy immediately but will only execute if the full order can be met. For example if we were trying to buy 10 Litecoins at $180 but only 9 were available at this price the order would not execute
Read more about the advanced options here.
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