Comprehensive Guide to Trading Coinbase
Coinbase (COIN) continues to be one of the most popular platforms used by traders to buy and sell cryptocurrencies. The platform has exited its IPO phase and thus - Coinbase stocks are now available to trade online.
For the beginners among you, the main question here would be how to trade Coinbase stocks safely and securely by minimizing the risks involved.
Our How to Trade Coinbase Stock guide here will help you find all the answers you are looking for - from choosing the right online broker, planning your strategy, and finally, how to trade Coinbase stocks from the comfort of your home.
If you want to trade Coinbase Stock and pay 0% Commission, check out eToro Exchange!
How to Trade Coinbase Stocks in 5 Minutes - Quickfire Guide
Looking at how to trade Coinbase stocks right now without reading our guide? If so, follow the steps outlined below to trade Coinbase stocks in under 5 minutes!
- Open Trading Account: Open a trading account with a regulated brokerage that offers Coinbase stocks.
- Deposit Funds: Make a deposit into your account so that you have trading capital to buy and sell Coinbase stocks.
- Search for Coinbase: Enter ‘Coinbase’ into the search box at click on ‘Trade’.
- Enter Stake: Enter the amount of money you wish to risk on your Coinbase trade.
- Place Coinbase Trade : Finally, click on the ‘Open Trade’ button to place your 0% commission Coinbase trade at eToro!
And that’s it - you’ve just learned how to trade Coinbase stocks!
What is Coinbase Trading?
As you might know, Coinbase is now a publicly-listed company, allowing you to own a piece of the firm by purchasing its shares.
However, when you are thinking in terms of how to trade Coinbase stocks, the concept is a little different. As a trader, you will be buying and selling the shares of this company in order to capitalize on its stock price movement.
In other words, you will be trying to predict whether the value of Coinbase stock will rise or drop in the future. According to your speculation, you will open a position on this asset. If you turn out to be right, you will make a profit from the trade.
Here is an example that will help you to understand how to trade Coinbase stocks with better clarity:
- So, suppose that Coinbase stock is priced at $250 per share.
- You open your trade by allocating $1,000 to this position.
- In the next few hours, Coinbase makes an announcement that leads to a surge in its stock value.
- As such, the price of Coinbase stock increases to $275 per share at the end of the day.
- Pleased with the gains of 10%, you sell your Coinbase shares at $1,100.
Since you were right about the market movement, you made a profit of $100 on this Coinbase trade. Had you been wrong, you would have been dealing with a loss.
As you can see, the goal of a trader is to profit from the volatility, by buying or selling Coinbase stocks. In order to time the market correctly, you will need to do extensive research, often dedicating several hours a day for this purpose.
Ultimately, you will be trying to figure out the supply and demand of this company. If more investors want to buy Coinbase stocks, then you will see its price take a bullish turn.
On the other hand, if owners are disposing of their COIN shares, you can expect a bearish market ahead.
It goes without saying that you will need to gain experience to be a master at the game of stock trading. Therefore, when you think of how to trade Coinbase, it is always best to limit your risks to the amount you can afford to lose.
How Does Coinbase Stock Trading Work?
You now know that when we refer to Coinbase stock trading - it simply means that you will attempt to buy and sell this asset for a profit. So, what steps do you need to take to make sure that you are correctly timing the market?
For that, you will first need to understand what factors will affect the market volatility of tradable assets, namely - Coinbase stocks.
Coinbase Price Movements
The share prices of any publicly-listed company will change throughout the day, which is what drives the stock market. As a Coinbase stock trader, you will need to know what factors affect the value of this firm.
Unfortunately, there is no clear cut answer to this. There could be several elements that determine the value of Coinbase in the eyes of an investor.
For instance, if the cryptocurrency market continues to perform well, so will COIN shares. Additionally, a change in the governing policies of this company can also have a positive or negative impact on the price of its stock.
Ultimately, the stock price of Coinbase is affected by supply-demand economics, as we discussed earlier. You can rely on fundamental and technical analysis to follow the market fluctuation of this asset.
Once you understand what factors are responsible for causing the price fluctuation of Coinbase stock, you can keep an eye out for them. In turn, you will be able to make informed decisions for trading this asset successfully.
Long or Short-Term Trading
If you are trying your hand in the stock market for the first time, remember that you will be best served by keeping things simple. This is why you might want to consider the long-term performance of Coinbase instead of trading it in the short-term.
Basically, this means that you will be adopting an investment strategy. To simplify, you will be purchasing Coinbase stock by taking ownership of the underlying shares. Once their value increases, you will cash out, ideally making an attractive return.
This is an easy-to-follow strategy because of two main reasons. For one, unlike trading, you do not have to watch over every single price movement of Coinbase stock to find the right opportunities.
Secondly, stocks are considered an asset class that can give you a higher potential rate of return over the long term. Moreover, you will actually be owning a part of Coinbase. As such, if the company decides to distribute dividends or reward its shareholders in some other way, you will stand to benefit.
For those who are wondering how to trade Coinbase stocks in the long-term, you will have to hold on to your shares for a minimum of one year. Of course, the duration can vary depending on your financial goals.
On the other hand, if you are looking to make a profit from Coinbase stocks in the short-term, you might want to consider strategies such as ‘day trading’ or ‘swing trading.’ In these methods, you will be focusing on the volatility of the shares.
To elaborate, you will be buying and selling Coinbase stock frequently. However, when compared to investing, you will be risking smaller amounts to make marginal profits. At the end of each day, since you place multiple trades - the returns can add up to a decent sum.
However, as you might have guessed, it is not an easy job to trade Coinbase on a short-term basis. You will need to be experienced with reading charts and performing technical analysis to be an expert in price prediction.
For this reason, if Coinbase is among the first shares you are investing in, you might want to stick to a long-term strategy - until you are fluent with the ways of stock trading.
Trade and Own Coinbase Stocks
As you know by now, taking ownership by buying shares of this company is one way of approaching a Coinbase investment. So, how do you do this?
Being an investor, you cannot gain direct access to the stock market. Your only way is to find a broker that can represent your interest in the best possible way. In the earlier days, this job was done by individuals who were industry experts.
Today, as with almost everything else, the trading industry has also ventured into the online space.
However, this comes at an advantage to you in the form of convenience and ease. The only thing is that you need to be extremely careful in selecting your stockbroker - by making sure that your chosen platform is regulated.
Among the few online brokers that give you access to Coinbase, eToro is a platform that has beginner-friendly features and tools. You will be able to find your way around the trading interface pretty fast and start placing trades right away.
Moreover, eToro is a fully-regulated brokerage platform, meaning your interests as a trader are well-protected. You will also have access to commission-free trading via this website.
Short-Term Coinbase Trading
If you want to engage in short-term Coinbase trading, then it is not always feasible to take ownership of the stock. This is because you will be entering and exiting the market more frequently.
What stockbrokers suggest you do in such cases is to trade Coinbase using a financial derivative called CFDs. This product merely tracks the value of this company and does not need you to own the shares to speculate on them.
In other words, if the share value of Coinbase increases, so will the price of its CFD, and vice versa. If you are a beginner, it is worthwhile to learn about the advantages of trading Coinbase stocks via CFDs:
- As CFDs only mirror the value of Coinbase stocks, you can speculate on both bullish and bearish markets.
- CFDs can be leveraged, meaning you can trade with more than what you have in your brokerage account.
All that being said, CFDs can be a risky instrument to dabble with, especially for beginners. And consequently, you might find restrictions for using this product depending on your country of residence.
Regardless, you will want to ensure that you are trading Coinbase CFDs only through a regulated broker.
Read Also: Benefits Of Online Trading
How to Trade Coinbase Online - Setting up a Trade
When considering how to trade Coinbase shares, you might be thinking of stock exchanges like the NYSE and NASDAQ. However, as a trader, you will not be able to directly buy or sell shares on these marketplaces.
Instead, you will have to go through a broker and place your trading orders with them. Today, with online platforms taking over, this process has been made more convenient.
However, you still need to know about trading orders. Basically, which orders you have to use and when.
As such, in this section of our How to Trade Coinbase Guide, you can learn about some of the most useful trading orders.
Buy or Sell Order
There are two ways for you to make money from trading Coinbase stocks.
- The first is to open your Coinbase trade with a buy order. This will indicate to your broker that you are going long on this stock. When the price increases, you will use a sell order to close your position in profit.
- The second option is to capitalize on the falling prices of Coinbase stocks. If going short, you will be opening your position with a sell order instead. As the value of the asset decreases, you will then place a buy order to exit your trade.
These two orders form the basis of your Coinbase stock trade, indicating to your broker how you are approaching the market.
You might not be aware that as a trader - you can decide not only when you enter the market, but also how. In other words, you can choose at which price to buy or sell Coinbase stock based on your strategy.
There are two commonly used trading orders for this purpose.
Market orders will allow you to process your trades immediately. So, if you are buying Coinbase stock, you will be purchasing the shares for the next best price available.
However, this might mean that you have to be ready to accept a small price variation that occurs due to volatility - one that will not affect the profitability of your trades. In case your strategy demands otherwise, you will have to use a limit order.
Limit orders are useful when you want to define the entry price of your Coinbase trades. Your broker will only buy or sell the stock on your behalf if the value meets your predefined rate.
You will be using limit orders in cases where getting the entry price is more important than the speed of the trade. Unlike market orders, there is no knowing if your limit order will be filled at all.
If you do not want to keep the position pending, you always have the option to cancel it manually.
Along with your entry price, you will also need to think about how you want to close your Coinbase stock trades. After all, this will determine how much profit you make from your position.
You can use the following trading orders for this purpose:
- Take-Profit Order - This order tells your broker at what price you want to close your trade in profit. So, if the Coinbase market moves as per your prediction, your take-profit order will be activated in order to exit your position automatically.
For example, let’s say that you opened a long position on Coinbase worth $100. You want to make a profit of 5% and set the take-profit at this level. Your broker will thus close the trade at $105.
- Stop-Loss Order - As obvious, you will be using stop-loss orders to limit your losses from a potentially unfavorable market condition. Similar to a take-profit, you can set the price here, and if the value of Coinbase stock hits that level, your broker will automatically close your position.
For a first-time trader, it can be confusing how to use these trading orders together. We have put together an example that can help to clear the mist.
- Let’s say that you want to take a long position on Coinbase.
- The shares of this company are trading at $250 on your brokerage platform.
- You place a limit order to buy Coinbase stock when it reaches $252.
- You also want to sell your Coinbase shares if it hits a price of $255.
- So you proceed with a take-profit order set at $252.
- In the meanwhile, you also set a stop-loss order to close your trade if the value of Coinbase hits $245.
In this example, no matter how the market moves, your broker knows which order to execute and how to close your position.
So if the value of Coinbase reaches $255 - your broker will activate your take-profit order. If the price of the stock drops to $245, your stop-loss will be executed.
In summary, trading orders can help you automate the process while keeping your manual intervention to a minimum. This way, even if you are not watching over every price movement, you will know that your Coinbase trades will be executed as per your instructions.
Check Out: Simple And Effective Exit Trading Strategies
How to Make Money Trading Coinbase
While Coinbase stock trading is highly speculative, there are also ways for you to boost your profits. In fact, the gains you make from a successful trade will depend on the following factors:
Your profits from a Coinbase trade will almost entirely depend on the amount of money you are risking on this asset, also called your ‘stake.’ So, if you are willing to put in a higher amount, you will also reap more returns.
However, even if you find a talent to successfully trade Coinbase stocks, it is never a good idea to randomly decide your stake amount. The more you risk, the more you stand to lose.
So you might want to think of a bankroll management strategy well before you even start placing your first Coinbase stock trade. For example, you can decide that you will not risk more than 2% of your available funds on this individual stock. This can help limit your exposure to too much volatility.
Moreover, by sticking to this strategy, you are less likely to let your emotions take over and risk too much money - something that happens too often when the market appears to be in your favor.
It is crucial to never forget about volatility, which can be your best friend and worst enemy in the stock trading arena.
Coinbase Trading Leverage
When wondering how to trade Coinbase stocks, you are likely thinking that you can only buy the shares with the money you have. The main drawback here is, of course, that your gains will always be limited by your financial resources.
To help you maximize your profits, some brokers allow you to borrow money and stake more on your Coinbase stock positions - which is called leverage.
- Let’s say that you have $1,000 in your brokerage account.
- You want to purchase Coinbase stocks that are currently trading at $250 per share.
- With the funds you have, you will be able to buy only four shares of Coinbase.
- So, you choose to apply leverage of 1:10, increasing your stake to $10,000.
- This will let you buy 40 shares of Coinbase.
- If you make a profit of 30% on this trade, your gains would be amplified by 1:10 - making it $3000.
- Without leverage, your profits would be limited to 30% of $1,000 - which is $300.
As you can see, leveraging can seem like an attractive way to magnify your profits. However, most beginners do not realize that it will apply to your losses too.
Hence, you will want to be particularly careful when leveraging your Coinbase trades. If you choose to go ahead, you should make it a point to only do so via a regulated stockbroker like eToro.
Fees to Trade Coinbase Stocks Online
As we covered already, you will invariably need to use the services of a stockbroker to access the NASDAQ - which is where Coinbase is listed. However, this comes at a cost.
Stockbrokers are known for charging an assortment of fees for facilitating your trades. This ranges from commissions, transactional expenses, administrative costs, and more.
If not careful, you will find yourself giving up a noticeable part of your profits to your trading site.
Therefore, when learning how to trade Coinbase stocks, you should be wary about what fees you are being charged by your chosen brokerage platform.
Coinbase Stock Trading Commission
First and foremost comes the trading commission, a fee that has been well-integrated into the stock market. This is charged by your broker for facilitating your Coinbase trades.
Some brokers might charge you a flat-rate commission, whereas others will provide you with a variable fee that changes with the size of your trade.
- If your stake on Coinbase is $1,000, a commission of 2.5% will cost you $25 in fees.
- Then if you are able to sell the same position at $2,000 - the commission will increase to $50.
Notably, you will be charged a commission at both ends of your Coinbase trade.
The good news is that these days there are online brokers that will not charge you any commission at all. For example, when thinking about how to trade Coinbase stocks on eToro, you do not have to worry about this fee.
Instead, eToro is a 100% commission-free broker giving you unfettered access to international stock exchanges. The only fee that concerns you will be the spread.
The spread on Coinbase stock refers to the difference between its buying and selling price.
So, if your broker quotes the buying price of Coinbase at $250.01 and the selling rate at $250.02 - then the spread is $0.01. You want this difference to be as ‘tight’ as possible - so that you do not have to pay a high fee on your position.
Moreover, the profit from your Coinbase trades should also exceed the cost of the spread. For instance, in the example above, the difference between the buy and sell price comes to $0.01.per stock
Your Coinbase trade will need to realize a profit of at least $0.01 per stock in order to break even. This is particularly crucial if you are engaging in short-term trading - targeting marginal returns.
Other Coinbase Trading Fees
Apart from the fees for facilitating your trades, the broker will also impose a variety of charges to cover their maintenance and operational costs:
- Deposits and Withdrawals - While transferring your funds to and from your chosen brokerage site, you might also have to pay transactional fees depending on the payment method you choose.
- Overnight Fees - If you are engaging in short-term trading of Coinbase stocks using CFDs, you might also be charged an overnight fee for any positions you keep open for more than 24 hours.
- Inactivity Fee - Your chosen broker might also have a minimum requirement for trading activity to be fulfilled every six months. If you do not meet this condition, you could be charged an ‘Inactivity fee.’
These brokerage fees can come in all shapes and sizes. Unless you are careful, these can add up in time, taking away a hefty part of your take-home profits.
As such, even if it is time-consuming, make sure you go through the fee structure of your chosen broker carefully. If your trading platform is like eToro - which doesn’t charge you any commission, you will be able to limit your expenses to a large extent.
How to Trade Coinbase - Step-by-Step Walkthrough
By now, you should have a fundamental idea about what it means to trade Coinbase stocks. As stated, we will end our guide by providing you with a detailed description of how you can start your Coinbase trading journey in just 5 minutes!
Step 1: Choose a Coinbase Stock Trading Site
Throughout the guide, we have discussed the role of a stockbroker in facilitating your Coinbase trades and how important it is that you choose the right one.
In fact, choosing the wrong brokerage platform can cost you time, money and even discourage you from exploring the trading space further. However, it can be quite exhausting for a beginner to find a platform that best fits their needs.
To make your search easier, you can check through the following criteria:
- Regulation: What is the regulatory standing of your chosen broker? Does it hold a license from a respectable financial authority like the FCA, SEC, CySEC, ASIC, or others?
- Fees: What kind of commissions and other fees are you required to pay when trading Coinbase stocks?
- Payments: How can you make deposits and withdrawals on the brokerage platform?
- Minimum Deposits: Do you need to make a minimum deposit to start trading Coinbase?
- Trading Platform: Is there a demo account that can help you get used to the trading interface?
- Mobile Application: Can you access the Coinbase market via a mobile trading app?
Evaluating these aspects will help you find a stockbroker that can cater to your requirements.
For those who want to save some time and start trading Coinbase stocks right away, you can make eToro your first stop. This platform is regulated by multiple financial authorities - including the FCA, ASIC, SEC, and CySEC.
You will also have commission-free access to Coinbase trading and thousands of other stocks across international exchanges.
To show you how easy it is to start trading Coinbase stocks at eToro, we will be using this platform as a guide for the rest of our walkthrough.
Step 2: Open Coinbase Trading Account
When you have figured out which platform you are going to use to trade Coinbase, you can get started with your brokerage account.
So if you have chosen eToro, you can head over to its website and find the ‘Join Now’ button on the homepage. Click on it to fill in your email address, and set a password for your account.
You will also need to enter your personal details, such as your name, phone number, date of birth, and address.
The next step is to complete the KYC process on eToro. Although it might sound like a prolonged process, you can finish it quickly by providing a digital copy of your passport or driver’s license.
You will also need to submit a utility bill or bank statement that can verify your address.
eToro will complete the verification process in a few minutes, and if your documentation is sufficient, you will be able to start trading Coinbase stocks right away.
Step 3: Add Funds
For your broker to place trades on your behalf, it needs access to your funds. In other words, you will need to transfer some money to the platform to get started with Coinbase stock trading.
Platforms like eToro make this step incredibly easy by presenting you with a wide range of payment methods to choose from, such as -
- Bank transfer
- Debit card
- Credit card
Among these, bank transfers take the longest, requiring 3-7 business days to process.
Step 4: Find Coinbase Trading Market
When your eToro account is ready to use, you can look for Coinbase stocks. This can be done by searching for the company on the platform. Once the result appears, you can click on the ‘Trade’ button to commence.
Step 5: Place Coinbase Trade
Once on the Coinbase trading page on eToro, you can select whether you want to buy or sell this stock. Next, specify whether you want a limit or market order, and enter the stake amount.
If you wish, you can also set the take-profit and stop-loss orders values.
When you are ready, you can find the ‘Open Trade’ button that will activate your position.
eToro will then complete your commission-free Coinbase trade as per your trading orders!
How to Trade Coinbase Stocks Guide - The Verdict
Contrary to the widespread misconception, stock trading does not need to be a complicated process at all. When thinking of how to trade Coinbase stocks, a good place to start would be to learn more about this company and its potential future.
This will help you decide whether you should choose a long-term or a short-term strategy. No matter which approach you choose, you will want to find a regulated broker like eToro - which gives you commission-free access to the stock market.
eToro - Trade Coinbase Shares with 0% Commission
eToro have proven themselves trustworthy within the stock market over many years – we recommend you try them out.
Your capital is at risk. Other fees may apply
How to trade Coinbase stock?
Coinbase is listed on the NASDAQ and can be traded via a regulated broker like eToro.
Is there a minimum investment required to start trading Coinbase?
Your chosen broker might require you to make a minimum investment to trade Coinbase. On eToro, this is set at just $50, allowing you to gain exposure to this Coinbase without risking high amounts.
How can I make money from Coinbase stock?
You can either choose to buy and hold Coinbase stock for the long term or engage in short-term trading via a regulated brokerage platform.
Can I get leverage on Coinbase?
Yes, regulated brokers like eToro allow you to trade Coinbase with leverage.
Is it a good idea to buy Coinbase stock?
The value of Coinbase is largely dependent on the cryptocurrency industry. If you think this sector is going to perform well, you might want to add COIN shares to your investment portfolio.