For new investors just getting involved in the markets, there are some key bits of information that are always important. One of those little bits of information includes trading with no fee on Coinbase (GDAX). Coinbase is one of the largest and most user-friendly platforms available on the market and constantly has new users coming to the exchange daily. Because of its ease of use, Coinbase has grown a positive reputation in the industry amongst newcomers and experienced investors alike. But what about those darn fees? Let’s take a look at how you take advantage of GDAX for zero fee trading.
Wait, What’s GDAX?
First you might be wondering what that acronym is: GDAX. That acronym is actually the secret to getting zero fee trading on Coinbase. Everyone is familiar with the Coinbase website and app. Both the site and app are incredibly easy to get introduced to the markets, but what about GDAX?
Well, GDAX is actually another entity completely owned and operated by Coinbase. If you’ve used Binance at all, you may be familiar with their “basic” vs “advanced” layouts for traders, that’s basically what this is for Coinbase.
If we go on over to the GDAX site, we’ll actually see that the URL includes the Coinbase name:
Short for “Global Digital Asset Exchange,” GDAX is a more advanced option for investors looking for more tools.
You may have seen the site before, it looks like this:
Well that Looks Confusing
Don’t worry, the site can look a little intimidating at first, but it’s really simple once we break down what we need for zero fee trading. Without going too much into the technical details, let’s take a look at the GDAX fee structure.
‘Taker’ and Trading With Fees
As we see from the fee structure, “takers” in the market pay a fee for their purchasing, selling, and trading of assets. A “taker” is an investor who is simply buying, selling, or trading based the current market price. Instead of placing an order for a price they’d like and waiting, they buy right now. Because of that, they are “taking” the price the market offers them. [See fee structure above, taken from Coinbase’s website]
‘Maker’ and Zero Fee Trading
On the other hand, being a “maker” means zero fee trading across the board. When we take a look at the fee structure, we’ll see that “makers” have absolutely no fees for trading assets.
All a “maker” is is an investor who does not take the standard market price. Instead, when buying, selling, or trading, a “maker” sets their own price. Say you’re wanting to buy bitcoin (BTC), and it’s currently trading at just over $9,100. Well, let’s say you’d really like to get it at $9,000 instead. What you can do to be a “maker” then is place an order. Instead of taking the current market price and buying at $9,100, you’ll wait. By placing your order and waiting, you’re effectively “making” the market by driving it a little towards your direction.
Great…but How do I do That?
The secret for a zero fee trading model on GDAX is utilizing the “limit buy” and “limit sell” options on the exchange.
When we’re on the GDAX exchange, we’ll go over to our options on the left side of the screen. When we’re there, we’re going to not use “market” for an order, but instead select “limit.”
Once we’ve switched over to the “limit” tab, we’ll select the quantity of the coin we’d like and price. For the case of this example, we’ve placed the order for 1 BTC at the price of $9,000.
We need to make sure we’ve entered all of our information correctly, so let’s look it over! Make sure you have the correct amount of bitcoin (BTC) entered: 1 (check). Make sure you’ve got the correct price: $9,000 instead of $9,100 (check). Lastly, we’ll need to make sure the execution is set for “post only”(check). If we select “allow taker,” then we run the risk of incurring fees.
After you’ve selected “place buy order,” all you need to do is wait. Congrats, you’ve done it. Once the price of bitcoin reaches the level you’d like to buy at, then GDAX will automatically execute the purchase. Depending on the fluctuation of the markets, that could be in 20 minutes or 20 days.
Using Zero Fee Trading to Your Advantage
Now that you know how to place an order on GDAX with zero fees, you can take advantage of that for other assets on the exchange. In the exact same way we’ve just placed an order to buy, we can place an order to sell.
By using limit orders for buying, selling, and trading cryptocurrencies, investors will incur zero fees for trading and will be able to take advantage of smaller margins, and bigger plays.