How to Buy Compound - Beginner's Guide
Buying Compound in 2021: A Step-by-Step Guide
Are you interested in buying Compound, but not too sure where to begin? You’re not alone. The COMP digital coin is a hugely popular cryptocurrency to buy, the world over. But, for beginners, this can be quite intimidating.
Founded by the economist Robert Leshner, Compound is a decentralized finance protocol.
Compound enables cryptocurrency owners to provide and take out loans by collateralizing their digital assets. Its native token COMP is primarily used for the community governance of the Compound lending protocol.
In this guide, we aim to provide an easy and quick-to-understand overview of how to buy Compound in the most convenient manner. We will also discuss what you need to know when choosing a reputable online crypto provider for your Compound investments.
Buy Compound in 5 Steps
As opposed to the common misconception, buying a cryptocurrency like Compound is not at all a complicated process. In fact, you can complete the purchase of this digital asset within a few minutes by following the steps we have outlined below:
To buy Compound, the first step is to Open an account with a regulated exchange, deposit funds, select Compound from the trading platform list, and lastly check & confirm COMP tokens have added to your Wallet.
You will find below a simple 5 step run-through of how to buy Compound:
Step 1: Pick a regulated crypto broker that supports Compound.
Step 2: Create and fund your brokerage account using a credit card, debit card, or e-wallet.
Step 3: Locate Compound from the list of available digital assets.
Step 4: Enter the number of COMP coins you want to buy.
Step 5: Verify all details, and confirm your order.
Once the transaction is complete, the COMP tokens you just bought will be added automatically to your financial portfolio on the platform.
Step 1: Choose an Online Compound Broker or Exchange
In order to make profitable financial investments, you need to choose a broker that aligns with your goals and investing style. Especially for beginners, choosing the right online crypto broker can make all the difference between a successful investment experience and an infuriating disappointment.
When it comes to buying Compound, one of the most common ways is to resort to the services of an online crypto exchange. However, during your search - you will come across both regulated and unregulated platforms.
It goes without saying that choosing a regulated crypto broker is a minimum requirement for the safety of your Compound purchases.
With this in mind, let us review the most important factors that you need to evaluate when choosing your online Compound broker.
Thanks to the rise of online cryptocurrency platforms, access to digital assets such as Compound has never been easier. However, today there are hundreds of crypto exchanges that are eagerly competing for your business.
The most crucial aspect that sets a trustworthy platform apart from the rest is its regulatory standing.
In order to prevent fraud in the financial world, there are several governing bodies that have formulated a set of guidelines for online brokers. If a crypto provider is regulated, then it means that it has to abide by these rules.
To give you an idea - this would mean that the platform has to keep your funds separate from its own and submit its accounts for regular audits. In addition, the broker also has to be transparent about the risks associated with investments.
As you can clearly see, choosing to use a regulated platform to buy Compound will offer you the protection of these governing bodies.
One such example is eToro, a reputable social trading platform with multiple licenses. The broker is regulated by three of the most renowned financial governing authorities - the FCA in the UK, CySEC in Cyprus, and ASIC in Australia. In addition, the platform is also registered with FINRA to offer its services in the US.
With such strong regulation, you can be confident that your investment funds will be safe under the strict monitoring of the respective bodies. In addition, eToro also offers an in-built digital wallet to hold your Compound tokens right on the platform.
In comparison, if you settle for an unregulated cryptocurrency exchange - you will be entirely responsible for the safety of your Compound tokens. This means that you will have to go through the hassle of finding another external wallet and ensure the safe custody of your private keys.
Once you are confident about the safety and transparency of the broker, the next aspect to look at is the convenience of using the platform. For those unaware - you can rarely buy Compound tokens directly with fiat currency such as USD or EUR on an unregulated cryptocurrency exchange.
In other words, you will first have to get your hands on another cryptocurrency such as Bitcoin and exchange it for Compound. Needless to say, it can be an excruciatingly long and challenging process - especially if you are a beginner.
At the other end of the scale, regulated brokers such as eToro give you the advantage of funding your account using a number of payment methods. You can choose to pay for your Compound tokens using a debit card, credit card, or even a global e-wallet such as PayPal.
If you want to use traditional payment methods, even a wire transfer is available at your disposal. However, as you might already know - this will require you to wait a couple of business days for the funds to arrive.
The ease of depositing and withdrawing funds with your chosen payment method should be of prime concern when looking for a broker to buy Compound from.
Fees and Commissions
For those unaware, when you use the services of an online broker - you are bound to pay a variety of fees. What you will be charged for will be entirely dependent to your chosen platform.
For instance, let us consider the case of eToro. This regulated online broker is a 100% commission-free platform. Meaning, when you are buying Compound from eToro, you do not have to pay a cent in commission.
In comparison, popular cryptocurrency exchange Coinbase will charge you 1.49% in commission for buying and selling Compound. To elaborate - if you buy $1,000 worth of Compound tokens, then you will end up paying $14.90 in commission every time you open or close a position.
As evident, if you choose eToro - you can evade this fee altogether.
In addition, it is also not uncommon for crypto providers to charge fees for processing deposits and withdrawals. This means that every time you add money to your account, a fraction of your capital will be deducted.
Again, to use Coinbase as an example - the platform charges a whopping 3.99% fee for every debit card payment to buy Compound. On the other hand, on eToro - you will not be charged anything if you are funding your account in USD.
You will only have to pay a 0.5% exchange fee if you are depositing in another currency - such as in EUR or GBP.
Other Important Factors
By now, you might have already narrowed down your list of the best online brokers to make your Compound purchase. Here are a few additional characteristics that will help you make that final decision.
- User-Friendliness: As we mentioned above, the user-friendliness of the platform can be a decisive factor for many when choosing an online broker. After all, if you are unable to find your way around the platform - then even the most sophisticated features will not be of much use to you.
- Minimum Investment: Most brokerage platforms require that you invest a minimum amount in order to gain access to Compound tokens. It is in your best interest to find a broker that allows you to buy Compound with minimal requirements. For instance, eToro makes it possible for you to purchase COMP coins from $25.
- Storage: Once you have completed the purchase, you should also consider the safe storage of your Compound tokens. If you choose a platform such as eToro, you will have nothing to worry about as the broker offers an in-built wallet for your digital assets.
Read Also: Could Compound Be A Millionaire-Maker Coin?
Step 2: Come up With an Investment Plan
Choosing a crypto broker and deciding on an investment plan should go hand in hand. This will help you find a provider that can fit your exact needs.
Therefore, when you think of how to buy Compound, one of the first things to consider is how you want to approach your purchase. For instance, are you looking to make longer-term capital gains from Compound or profit from its short-term volatility?
In this section, we will consider some of the popular investment strategies adopted by Compound investors and traders.
Long-Term or Short-Term
When it comes to buying Compound - defining your strategy is crucial so that you can align your investments with your financial goals. Based on your preferences, you have the option to pursue a short-term or a long-term plan.
A long-term strategy is often adopted by those who want to hold on to their Compound tokens for a duration of three years or more. This 'buy and hold' strategy will allow you to look past the short-term volatility of your COMP tokens and focus on making longer-term capital gains from the asset.
To demonstrate - when Compound was launched in June 2020 - its price was trading at $97.64. By May 11th, 2021 - the value of a single Compound token had hit an all-time high of $905.97. This translates to an increase of over 800%.
Long-term investors can cash out their Compound investments when they think the right time to sell has arrived
If you would rather stick to a short-term strategy, then you will be essentially trying to profit from the day-to-day price movements of Compound.
Sometimes, this will involve you opening multiple positions within the span of the day or placing trades based on a trend.
As you can imagine, in order to become a successful short-term Compound trader - you will need to have a firm grasp of the market forces in play. Not only that, but you will also have to be familiar with the use of technical indicators so that you can make informed trading decisions.
Target Compound Price
Some investors also choose to define their strategy based on how much profit they want to achieve.
For instance, let's say you have a profit target of two times your initial investment amount. This means that if you buy Compound for a price of $300, you will need to sell it for at least $600 per coin.
If you are aiming to quadruple your original outlay - then the value of Compound should increase to $1200 - and so on.
As we mentioned earlier, Compound has already managed to increase significantly in value in the matter of just a year. Considering that, such profit targets might not be a far-fetched goal to achieve.
However, whether or not you can reap such profits will depend entirely on your ability to correctly time the market.
Consider Regular Investments
Cryptocurrencies such as Compound have a reputation for being extremely volatile. Considering this, it is crucial that you have a risk mitigation strategy in place in order to minimize your exposure.
One of the common methods chosen by investors to keep control of their investments is to buy Compound at regular intervals. For instance, if you have $1,000 to invest in this digital asset - you might split it into five investments of $200. You might make your purchases on a weekly or a monthly basis, based on the finer details of your strategy.
This way, you will not be risking all your money at once. This 'dollar-cost averaging’ method will allow you to make periodic investments and reduce the impact of market volatility.
Don't Miss: Pros and Cons of Investing in Compound
Step 3: Open a Compound Broker Account
At this stage, you might already know which Compound broker you want to choose and what investment strategy to follow. If you are confident with your decisions, you can proceed to create your user account on your chosen brokerage platform.
To begin with, you will have to provide your email address, as well as create a username and password for your account.
If you are using a regulated platform such as eToro, you will also have to comply with KYC regulations. Meaning, you will have to provide an official ID card to verify your identity. Alongside, you will also have to upload a copy of your recent bank statement or a utility bill in order to prove your residential address.
As this process is mostly automated, you will be able to verify your account and gain access to the Compound marketplace right away.
Step 4: Deposit Some Funds
With your brokerage account verified - the next step is to make a deposit.
As we mentioned earlier, when choosing an online broker like eToro - you will be able to make a deposit using a credit card, a debit card, or an e-wallet such as PayPal.
You might also have the option to choose a more time-consuming wire transfer if you prefer.
Step 5: Set up a Trading Order
If you are new to the investment process, you might be a stranger to the concept of trading orders. These are merely the instructions you give to your broker on how you want to open a position on Compound.
Since you will be dealing with online brokers, these trading orders will be carried out by simply pressing the respective buttons on the platform.
Regardless, the underlying concept of trading orders remains the same. Here are some of the most common ones you will want to make a note of when thinking about how to buy Compound:
A 'buy order' is how you enter the market when you expect the price of Compound tokens to go up. It will indicate to the broker that you want to purchase a certain amount of coins and hold it until you are ready to sell.
However, there are brokers that also allow you to capitalize on the bearish market of Compound - by opening your trade with a 'sell order.'
In this case, you will place a 'buy order' to close your position and profit from the lowered value of the COMP tokens.
Limit or Market Order
Once you know whether you want to enter the market with a 'buy order' or 'sell order,' you might want to consider at what price you want to purchase Compound tokens.
For instance, if you use a 'market order,' this means that you can buy Compound at the quoted value. This will tell your brokerage platform to execute the order right away - securing the next available price.
That said, as Compound is highly volatile, the price you actually receive might be slightly different. This is called 'slippage' and is quite common when you are dealing with market orders.
If you want to avoid this, you can use a 'limit order' instead. Put simply, you will be predefining the price at which you want to enter the market. Your broker will execute the order only when the value of Compound hits this level.
Unless Compound tokens reach this predefined price, your trading order will remain pending. If you do not want to proceed, you will have to manually cancel your limit order.'
Apart from trading orders, you will also have to enter the exact amount you wish to invest in Compound.
This amount is called your 'stake' in financial terms. The more money you stake - the more risk you will be inviting.
If you want to avoid risking a large lump sum investment, you can adopt a dollar-cost averaging method, as we discussed earlier.
Additionally, considering that the price of a single Compound token is quite high, you might also prefer a platform such as eToro that allows you to buy this digital asset from just $25 via its fractional investment tool.
As the last step, make sure that you have verified all the trading orders you have selected and the stake amount you have entered.
Once you are confident about your choices, you can confirm the order to execute the trade. The Compound tokens you purchase will be readily made available for you to withdraw to your digital wallet.
Read Also: Compound Price Predictions
Step 6: Storing Your Compound
When thinking of how to buy Compound - you should give high priority to choosing a safe storage method for your digital coins.
As we have already covered throughout this guide - you should know by now that it is always best to choose a regulated broker such as eToro that offers an in-built wallet for free.
This means that the coins will be automatically added to your eToro wallet and stored safely under the guidelines of the previously discussed regulatory bodies.
Contrarily, when you choose a cryptocurrency exchange - you will have to follow the cumbersome process of researching the ideal digital wallet for your Compound tokens.
In addition, you will also have to manually withdraw the coins to your private wallet.
Step 7: Selling Your Compound
The process of selling your Compound tokens is also one that requires the same careful consideration of buying the digital asset.
You will need to choose a regulated crypto broker and place the appropriate trading orders to sell your Compound tokens.
By now, you know how eToro can make this step more convenient for you. As the platform will be holding your digital assets - all you need to do is locate your Compound tokens in the eToro portfolio and click on 'sell.'
You will be able to place a withdrawal request to collect the proceeds.
In comparison, if you have stored your Compound tokens in an external wallet - you will first have to move them to your brokerage platform. This is not only time-consuming but can also cost you additional trading charges.
Altogether, it is imperative that you only choose a regulated broker to facilitate both the buying and selling of cryptocurrencies like Compound.
Other Ways to Buy Compound in 2021
Our How to Buy Compound Guide focused mainly on depositing funds into your brokerage account to purchase this digital asset. However, some platforms also allow you to pay for cryptocurrencies directly using one of these payment methods described below.
Buy Compound Debit Card
Debit cards are perhaps the most widely used payment method for online transactions.
And as such, naturally, many cryptocurrency brokers such as eToro offer support for debit cards on their platform.
This mode of payment is quite easy and straightforward. As usual, you can fund your investment by simply providing your card details. At the time of cashing out, the proceeds can be withdrawn to the same debit card you used for the purchase of Compound tokens.
Buy Compound Credit Card
If you would rather prefer a credit card, then eToro also accepts this payment method. However, you have to be wary of the 'cash advance fee' that you might be liable to pay to your credit card issuer.
Buy Compound Paypal
Apart from debit and credit card payments, e-wallets are also being used widely to make Compound purchases.
Platforms such as eToro offer support for multiple e-wallets - including PayPal, Neteller, and Skrill.
Cryptocurrency ATMs allow you to purchase digital assets such as Compound by inserting cash into the machine.
At the moment, there are close to 15,000 cryptocurrency ATMs located worldwide. However, if you are able to find one that supports Compound - the chances are that you will have to pay huge fees - often in the range of 5 to 20%.
In comparison, if you choose to buy Compound from an online broker such as eToro, the process will not only be more convenient but also cost-effective.
Check Out: Is It Worth Investing in Compound?
How to Buy Compound 2021 - The Verdict
In our How to Buy Compound Guide, we have given you a comprehensive account of every step you need to follow to purchase this digital asset in the most secure manner.
To conclude - let's reiterate the importance of using a regulated crypto broker such as eToro for buying Compound. This will ensure that all your investments are safe and commission-free.
Moreover, eToro also comes with an in-built crypto wallet for the reliable storage of your crypto coins - allowing you to feel confident that your Compound tokens are in safe hands.
eToro – The Best Platform to Buy Compound
eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.
How do I buy Compound?
For the safety of your investment, it is always suggested to use the services of a regulated online broker to buy Compound from. One such example is eToro - which is a brokerage platform regulated by the FCA, ASIC, and CySEC.
What is Compound token?
COMP token is the native currency of the Compound lending protocol, which functions as a decentralized financial platform.
How much money do I need to start buying Compound?
On eToro, you can start buying Compound from just $25.
What is the all-time high price of Compound coin?
On May 12th, 2021 - the price of Compound hit an all-time high of $905.97.
Is Compound a good investment?
The COMP token has performed exceedingly well since the date of its launch. However, it is not possible to accurately predict whether the token will continue to rise in the future. Therefore, when thinking of how to buy Compound - it is crucial that you do sufficient research about this digital asset.