I’m not a huge Bitcoin fan, I just enjoy dabbling in playing with it. I know it’s a bit convoluted in how to get into it, and I also know it seems like it’s built to absorb money in fees. With research, it’s possible to not only avoid fees (mostly), but to dictate your trade exactly as you wish.
I personally try to keep everything I do on the K.I.S.S. method. (keep it simple, stupid)
I do complicate things at times, but only when it makes other things easier. This we’ll keep it simple. There are many bitcoin exchanges, but this will rotate around one named Coinbase. Coinbase exchanges various cryptocurrencies including bitcoin, litecoin, and ethereum. This will deal strictly with bitcoin, but could be applied to other cryptocurrencies.
What will be needed is a bank account, and signing up for a free account on Coinbase.com. Once an account on Coinbase is created, on their website once logged on go into the Settings tab at the top and choose the Linked Accounts sub-tab. Add your bank account by choosing the “Link a new account” button and walk through the steps. After everything is complete, the account will be available to trade currency with.
Next will be going to the website http://www.gdax.com which is the more advanced trading platform owned by Coinbase. The authentication is the same userid & password as Coinbase.com.
While the interface may seem VERY complicated, the parts we will be focusing on are as follows:
- The top bar holds “Last trade price”, “24 hour price”, and “24 hour volume”.
The last trade price is the current price of 1 bitcoin on the market at that current time. The 24 hour volume is simply a percentage (positive or negative) price change throughout the last 24 hours that the market price of bitcoin has changed.
- The lefthand vertical bar holds balance information on your current gdax wallets (USD along with bitcoin BTC), and the tool below it to perform the trades.
- In the center is the dynamic chart of trades being performed. It may seem complicated at first, but is used as a general high view of the trends.
The first thing is to know what the colors mean.
- green = Trades being sold
- red = Trades being purchased
- The rest is great for information while researching trends, such as the Order book which holds more details on the trades in the general center chart, along with the Trade History which holds information on the historic purchases on the market. (If you want to view it, I never worry about it).
Before doing anything, simply watching the graph change for a bit and getting a feel for the flow of buys/sells is best. It will give you an idea of how at times sudden surges in buying and selling occurs, along with the patterns that can evolve at times. That is useful if you intend on using this for sudden purchases.
If you are like I am and intend to buy/sell at a particular price on the market, the way to handle that is with simple math before making any trades. The first thing you will need to know is how much money you are wanting to use for this trade. In this example, I will use $100.00. Then, the price that 1 bitcoin would be during your purchase. For this example, I will use $6500.00.
- First, we will break down the current market price of 1 bitcoin into the how much $0.01 would buy in bitcoins
- 1/$6,500.00 (1 divided into 6500.00) which is “0.00015384”. This is the amount of bitcoins $0.01 will buy currently.
- Second, multiply the money you’re using with the value we calculated last
- $100.00 * 0.00015384 = 0.01538400 This is the amount of bitcoins that your money will be purchasing.
We now know we will be using $100 to purchase 0.01538400 bitcoins (BTC).
The next step is to move money from your bank account to Coinbase. Once logged into coinbase.com, select the “Accounts” tab at the top, then next to “USD Wallet” is “deposit”. Select that, choose which account to withdraw from if you have more than one bank account inserted, type the amount, then “continue”. Bank account transfer is free, however it takes 5-7 days to complete. Once that is complete…
The next step is to move money from your Coinbase account to your GDAX USD wallet.
This is done by first logging onto dgax.com and on the top of the left bar under Balance, choose the Deposit button. In the popup, select “Coinbase Account” in the top bar, then choose “USD account” in the dropdown, then insert the amount to be used and select the “deposit funds” button. The transfer will be instant, since it is within the Coinbase network.
The final step is the trade!
Within GDAX, ‘limit’ trades are free. This will be a non-immediate trade that will occur once the bitcoin market price reaches the price chosen. In our calculations above we will be using $100 and trading with the market price at $6,500. That’s all we need to know to perform the trade.
To set the limit trade in place, on the left bar saying “Market” “Limit” and “stop”, choose “Limit”.
Select “Buy” underneath the Limit button. Now we enter the information into the fields below. Within “Amount”, place the amount of bitcoins to purchase. In our case, it will be “0.01538400”. Within “Limit Price”, place the market price you want the purchase to occur at. In our case, it will be “6500.00”. With the information entered, underneath will show the total amount of cash that will be used. Select “place buy order”, and the trade is set.
This will not instantly trade until the market reaches the amount chosen. If it did instantly meet that, there would be a fee applied so it’s best to give it a little room for motion. The same technique is used on selling, except you are selling existing bitcoins within the BTC wallet.
After all transactions are performed and you have BTC, they can be moved to your Coinbase wallet with the “withdraw” button and choosing “UTC Wallet” under coinbase account”. If the vault is used, there will be more time needed to withdraw since it is meant as long-term storage and also meant to be harder to access to avoid theft.
That’s the basics. If you wish to withdraw from gdax directly to your bank account, this can be performed as well. I did it this way and it was a free movement of ~
$2,200, so it bypassed any fees Coinbase did show.
Hope all this helps.