Coinbase Pro is the more advanced version of Coinbase, usually reserved for more sophisticated traders. However, with a little training it can become easy, and even beneficial, to use! This blog post will walk through how to use Coinbase Pro, some potential snags to avoid, and discuss some of the benefits of using the platform. Let's dive in!
After logging into your Coinbase account you will be taken to the trading exchange. (If you don't have a Coinbase account yet, you can create one at Coinbase.com. To learn how to use Coinbase, check out our Coinbase Blog Post.) At first glance it might look a little scary, but fear not! We'll get used to it in no time!
The first thing you will notice in the upper left-hand corner is the trading pair. In this example it is BTC-USD. This means that you can either buy BTC by selling USD, or sell BTC for USD. By hitting "Select Market" you can browse between the 55 different trading pairs available on Coinbase Pro! More into this later.
The next section you will see below the trading pair is "Wallet Balance." You will need to deposit funds before you can make a trade. The funds that are deposited will show up in your wallet balance here. If you only have USD deposited and are trying to trade a BTC-ETH pair for example, your USD will not show up. Make sure you are trading a pair in which you have deposited funds for either side.
Below the Wallet Balance you will find the "Order Form." To buy BTC using USD, press "Buy." To sell BTC and get USD, press "Sell." The type of order you set is important. If you set a "Market" order for a certain amount, your order will automatically get filled by buying up the cheapest available at that time. If you set a "Limit" order, you can set the limit, or price, that you are willing to pay. This may take some time to fill depending on the price that you set. A "Stop" order will automatically sell your position at a certain price. This is used to protect against loss. Also, notice that Coinbase Pro will take a small fee to complete the transaction.
The "Order Book" to the left shows all of the open, or unfilled, orders. The ones on the top, the red ones, are sellers (in this example, selling BTC). The ones on the bottom, the green ones, are buyers (in this example, buying BTC). The "Market Size" is the amount of BTC that is being sold for that price. In this example, there are 2.9770 BTC for sale at 11,658.41 USD. The "USD Spread" is the BTC value of USD available for trade. In this case, there are 3.8314 BTC worth of USD available to be bought by BTC sellers at a price of 11,658.40 USD.
The "Price Chart" will show you a candlestick chart (red = descending price action, green = ascending price action) of the price of BTC in USD over time, with the current market price shown on the far right side in green. You can set the timeframe that you want to view and even change the type of chart. The gray bars at the bottom represent relative volume.
The "Open Orders" section will show you any orders that you currently have open, and in detail how much of those orders has been filled, at what average price you got it for, and how much in fees you paid to Coinbase Pro. Once an order has been completely filled, it will move to the "fills" tab.
The "Trade History" shows all of the most recent trades that have been completely or partially filled. You can see from this chart that the bulls are in control! This means that the price is going up. There is more buying pressure. As the chart is mostly green, you can tell that there are more buyers than there are sellers. The Trade History also shows the amount of BTC that was exchanged, the USD price that it exchanged for, and the exact time of the exchange.
Now, let's dive into a few examples of making trades!
Let's say that I want to buy 10,000 USD worth of BTC. By looking at the Order Book I can see that the cheapest BTC available is selling for 11,658.41 USD and that there is 2.9770 of BTC available at that price. If I set a "Market" order in the amount of 10,000 USD, the order will get filled right away because there is enough BTC available to absorb that order at market price (10,000 USD = less than 2.9770 BTC).
However, let's say that I want to get a deal on BTC, buy it for cheaper than current market price! In this case, I would set a "Limit Order" of a price below market value. I could set a limit order in the amount of 10,000 USD for a price of 11,000 USD per BTC. In this case, I would have to wait until the market price of BTC dipped to 11,0000 USD for my order to get filled. Although I would be getting BTC for cheaper, it is also possible that the market may not go back down to 11,000 USD per BTC for a long time, or maybe even never. In that case the order would remain unfulfilled forever.
When using an exchange like Coinbase and trading the BTC-USD pair, you don't have to worry too much about setting a limit or market order for small to medium size transaction amounts. However, if you are trading on an exchange with less volume, especially if you are trading altcoins, it becomes much more important!
For example, let's say I am on Bithumb Global and I am trading a QNT-USD pair. QNT (Quant Network) is one of my favorite cryptocurrencies, connecting the world's networks, but it does not have much trading volume at this time. If I want to buy 1,000 USD of QNT on Bithumb Global I really, really should set a Limit Order. Here is why. Let's say that the cheapest seller of QNT is selling 10 QNT for 10 USD each, and then the next cheapest seller in the Order Book is selling 5 QNT for 11 USD each, and then the third cheapest seller is selling 20 QNT for 12 USD each and so on and so on. As you can see, the higher I get up in the order book, the more expensive the price of QNT gets. If I set a "Market Order," my order will buy up all the QNT I just listed, plus any QNT that is for sale at a higher price until my complete order of 1,000 USD gets filled. Not great for the dollar cost average! I would have paid way over market price! However, if I set a "Limit Order" of 1,000 USD, I could set my own price, saying that I am willing to pay 10.01 USD per QNT until the order gets filled. This would buy the initial 10 QNT that was available for 10 USD each, and keep the remaining 900 USD waiting for new sellers to come in and eventually fill the order. Although this takes more time, it gives me a much better dollar cost average.
Now onto the pros and cons of Coinbase Pro!
One of the major advantages of Coinbase Pro over regular Coinbase is that they have 55 trading pairs available! This includes USD, USDC, BTC, DAI, and ETH trading pairs. Several of the coins that you can get with USDC trading pairs on Coinbase Pro are not available on Coinbase. These include MANA, LOOM, GNT, CVC, and DNT. Although Coinbase lists 25 coins, most of these are bought with fiat only, namely USD.
In addition, when Coinbase is considering listing new coins, they usually drop on Coinbase Pro first. Anyone that has been around the space for a while will know that getting listed on Coinbase is a big deal! Just the rumor alone can cause the price to jump significantly. Getting listed on Coinbase provides easy liquidity, as Coinbase is one of the most widely used onramps for the average crypto investor. Users on Coinbase Pro can usually reap the rewards of the initial pump, as they have first access to trade for the coin.
Another pro is that trading on Coinbase Pro allows you to set market orders, a function that is not available on regular Coinbase. Although Coinbase is generally very liquid, meaning that there is a lot of USD and BTC available to make trades, slippage can occur if the trade is big enough. If you are trading serious positions, it is much better to use Coinbase Pro to make sure that you get the best price available. In this example in the the picture above, you can see that almost 3 BTC, or about 33,000 USD worth of BTC, is available at the market price. Setting a Market Order would not hurt you if you were investing that much or a lower amount. For larger orders though, a limit order would be highly recommended to protect against slippage.
The only con I would say is that using an exchange can be complicated if you are not used to using one. But, since you have all read this blog post, I'm sure you will do well :) Happy trading!