Coinbase is a platform for storing, buying and selling cryptocurrencies. They offer a “one-stop shop”, which acts as a wallet and exchange, plus offers a multitude of trading tools and resources. So, with over 10 million customers and $6 billion in cryptocurrencies in exchange, discover why day trading on Coinbase is so popular. This page will review how the trading platform works, and highlight its benefits and drawbacks, including coinbase trading apps, fees, limits, and rules.
Note! If you intend to trade cryptocurrencies, you do not necessarily want to own real money. It can be cheaper and more efficient to trade price fluctuations using derivatives where you can also capitalize on the results.
What is Coinbase?
Coinbase is a global digital asset exchange (GDAX). It’s basically a secure online platform, used to buy, sell, and transfer digital money. Their system also allows you to store your Bitcoins in their secure wallet. You can also store your Ethereum and Litecoin coins, plus other digital assets with fiat currencies in 32 countries. If you want to start trading cryptocurrency, you need a platform to trade, an intermediary to communicate with the blockchain network. That’s what Coinbase can offer you, a quick and easy way to take a favorable cut and trade your crypto.
Why use Coinbase?
So, if you are interested in storing and trading digital currencies, Coinbase could be an important service. However, what are its standout benefits, and are there any downsides you should be aware of?
Benefits
Cut through the noise
Coinbase allows you to bypass the complex underlying technology involved in digital currencies. You don’t need a deep understanding of blockchain technology or to take a long-term view of the success of currencies like Bitcoin. The Coinbase trading platform provides a simple way for you to capitalize on volatility in the cryptocurrency market. Volatility has seen Bitcoin grow fivefold in the first nine months of 2017.
Margin trading
You can also benefit from Coinbase margin trading. This allows you to borrow money from your broker to make more trades. It’s best to think of it as a short-term loan. The advantage is, margin trading enhances your leverage and purchasing power. This can allow you to increase profits far beyond what you can do with your current account balance. If you see a big move on the horizon, you can really profit from it. On top of that, Coinbase fees have been cut for margin trading. This means you won’t have to pay any additional interest or costs at this time. The downside is, you will need a minimum of $5,000,000 invested on a discretionary basis to qualify for a margin account.
Promising change for traders
Previously, customers had to wait several days to receive their digital currency after the transaction. You can now buy bitcoin and other currencies directly from your bank account. What does that mean? It allows you to trade in real time with GDAX. While it has been said that trading on Coinbase is geared towards institutions and large traders, this change will make it easier for day traders and the like. The popularity of this change was quickly apparent. Litecoin price was up more than 12% on the afternoon of the announcement, followed by an increase in Coinbase’s day trading.
Powerful Exchange
Coinbase exchange has everything a day trader needs. It offers a sophisticated and easy to navigate platform. The platform comes with a logbook, advanced charting capabilities, and a simple ordering process. It also collects trade history and allows back-testing. Since you will be spending most of your day on the platform, finding a comprehensive system like Coinbase is a big plus.
App
The Coinbase mobile app comes with customer reviews. It offers quick and easy charting, plus fast execution speed. You no longer have to miss an important price move because you’re stuck on a train, or in the middle of cooking dinner. Their apps are available on both Apple and Android devices.
Protect
You can also ensure security with Coinbase. 98% of digital assets will be secured in offline storage. Coinbase promises customers sensitive data that normally resides on our servers that are completely disconnected from the internet. That data is encrypted and transferred to a USB drive, as well as a paper backup, which is then stored in vaults around the world. If you have a substantial amount of money invested in Coinbase, you may want extra security. That’s where Coinbase vault comes in. This offers delayed withdrawals, giving you a 48-hour grace period to cancel. In addition, you can have multiple approvers, ensuring trading capital cannot be accessed as a result of a brief error in judgment. They do even better and offer customers a multi-purpose vault that requires more keys to unlock your cash.
Insurance
You also benefit from strong protection. Since Coinbase keeps all fiat currencies in the USD wallet, so it is covered by FDIC insurance. The cover stretches to $250,000. So even if Coinbase becomes insolvent, customer capital will still be protected.
Restrictions
While there are many benefits of day trading on Coinbase, there are still some notable pitfalls.
reliability
The complex work of the blockchain and other unverified reasons means that the Coinbase payment system can be a bit feisty. Some clients report significantly delayed payout times. As a short-term trader, you need quick and easy access to trading capital, so this may deter some potential clients. On top of that, bugs have periodically crashed the Coinbase trading platform, preventing some tools and aspects from working completely. While Coinbase is working to fix these issues, you don’t want to worry about the reliability of the platform when you have to decide to trade.
Pseudonym
Transacting through Coinbaise takes away your identity. Your name is tied directly to your banking and trading accounts. This means that the conversion history is simple to discover. Also, you can’t actually verify your transactions are happening on the blockchain. Instead, you can just put your trust in the middleman, Coinbase.
Installing
Luckily, setting up on Coinbase is a walk in the park. You need to follow three simple steps before you can start trading.
- Registration – This requires creating a digital wallet where you can store all your coins online.
- Connect – You need to connect your debit or credit to your Coinbase account. This allows you to exchange digital currency in and out of your local currency.
- Purchase – The fun part. You buy the digital currency of your choice. Coinbase is the largest Bitcoin exchange in the world, but you can also buy Ethereum and Litecoin.
Once you are registered and funded, using Coinbase to trade Bitcoin and other currencies works just like other trading platforms. During trading hours, the platform provides real-time cryptocurrency prices and will not be too different from your usual online stock tracker.
Coinbase Rules and Fees
Before you commit to and set up an account, be aware of the trading limits and regulations that you will have to comply with.
Rules
Before you start using Coinbase and trading digital currency pairs, you should understand account limits. If you use a bank account, you get higher limits, which are $100 in transactions and up to $2,500 a week. However, it will take longer to verify transactions, depending on your bank. When you sell Bitcoin, it can take up to a few days for the sale proceeds to appear in your account. Using a debit or credit card will limit you to a $200 a week limit. However, you can buy digital currency by transferring money directly from your account to the website. These transactions will show up in your Coinbase wallet instantly. You can also use PayPal. You can sell any digital currency easily to your PayPal account. Once you have withdrawn, your digital currency will be converted to local currency. Again, this transaction will also be instant.
Fees
They offer a simple and competitive fee structure. GDAX offers zero fees on producer transactions and generous volume-based discounts on all receiver fees. These fees could see you pay as little as 0.1%. However, they do charge transaction fees for buying and selling digital currencies on their trading platform and on their marketplace. These fees vary depending on your location. In the US, for example, the transaction rate is 4%, plus various additional costs, depending on the payment method. Notably, the instant transaction price is also higher than the transaction fee.
Trading Bots
Cryptocurrency and Coinbase Trading API are extremely open systems that allow any day trader to try his luck. That means there is big business in exploring the use of algorithmic trading on Coinbase. If you’ve built a successful strategy, then why not increase your profits by using an automated bot to do the heavy lifting? You will find Coinbase exchange that includes many trading bots. You are no longer competing with half-awake Joe at home. Get the Python trading bot, rife on Coinbase. It follows an exponential moving average strategy. It aims to sell bitcoins as soon as enough profit is made to pay transaction fees and a small profit. In high frequency trading, this can generate thousands of trades per day, which will hopefully turn out to be profitable in the long run, in such a volatile market. However, with thousands of people already using such strategies, how do you stand out? It means your strategy needs to be highly accurate, efficient and smarter than the rest. You can then use the Coinbase trading bot to come up with that strategy and give you the competitive edge you need. Automating trade execution based on predefined criteria can be a serious time saver, and in day trading, every second counts.
Last word
Coinbase’s trading volume has exploded in recent years, and it’s not hard to see why. Not only does it provide you with a secure wallet for your digital currency, but the GDAX platform is a smart platform that is suitable for use by traders of all experience levels. Before you jump to the deep end, check if trading fees are still competitive for your position and you can meet their strict account rules.