GDAX has become a very popular cryptocurrency exchange for buying and selling bitcoin, litecoin and ethereum due to its low fees and advanced trade options. For those readers who are new to GDAX or trading in general, you may wish to start with our GDAX intro article before proceeding with this article. Fees, account options and demonstration videos can be found there. This article will further explain the various trade order options available on GDAX with a focus on entering GDAX orders and trades.
Transferring money to your GDAX account
In order to buy or sell on GDAX, you must first move money or cryptocurrency into your GDAX trading account. Simply tap the “Deposit” button on the upper left GDAX menu, and a pop-up menu (Fig. 1 and 2) will allow you to select the currency and appropriate account. For crypto purchases, you’ll generally be depositing fiat currency from your bank or your Coinbase wallet. Select the source of your transfer, enter the desired amount, and then select “Deposit Funds” on the bottom of this window. If you are moving money from Coinbase, the transfer will be immediate. Transfers from bank accounts can take as long as 7-10 days, so prepare in advance for trading. Deposits made on a regular basis at set intervals will allow you the most flexibility when placing Buy orders. However, these must be made manually, as there is no current automatic transfer option for fiat currency in Coinbase or GDAX. There are no fees for depositing money into your GDAX account.
The GDAX Trading Screen
Select the desired currency from the top left drop down menu, and the trading page for that currency will display. Figure 3 demonstrates the areas of the trading page for litecoin (LTC.) Your available balance will be shown at the top left of the menus. Both your fiat balance and any coins that you have on GDAX will be shown in this portion of the screen. Your Coinbase wallet holdings do not display in your GDAX account. The most recent trading price is displayed at top of the screen, and the order book will show those orders closest to the current trading price. Red is used to display open Sell orders in system while open Buy orders are shown indicated by green text. In Fig. 3, the orders closest to the last trading price include a Sell order for 47.2435 LTC offered at $365.28 with buy orders of 0.01 LTC at $365.15 and so on down the list. You can scroll this order list to see more open Buy or Sell orders.
Placing Market Orders on GDAX
Placing a Market Buy order is straightforward. To purchase the selected currency, confirm that the green Buy option is highlighted, enter the desired dollar amount of currency you wish to buy. The estimated amount of cryptocurrency you will receive displays below your entry. Once you are ready to buy, select “Place Buy Order.” Be sure to enter amounts correctly, as the order will be filled nearly instantaneously. There is no cancel option once a Market order is placed. Check for extra zeros before placing the order. Figure 3 above demonstrates a buy order for $1,000 worth (approximately 2.7249 LTC) at current market price ($365.28) in the order entry box.
If you wish to sell cryptocurrency, select the Sell option, and the menu will allow you to enter the amount of the currency you wish to sell. The amount entered must be the number of coins you wish to sell, not a dollar amount. The estimated value of the trade will display below the order entry box. Again, triple check your entry before Place Sell Order.
GDAX Mobile Trading Interface
When entering GDAX orders on phones or tablets, the mobile interface may display tabbed menu options at the bottom of the page to switch between Trade, Book (orders in system,) Charts, Orders (your orders) and History (recently executed trade list) rather than displaying everything on one screen. There is no mobile GDAX app, but the menus are nearly identical to the web page displays. The interface is easy to use once you understand the options. Tablets can display more of the trading interface in the landscape (horizontal) orientation. This isn’t true for the iPhone display which must remain in portrait (vertical) mode. Experiment with your devices to determine how pages are displayed.
Placing Limit Orders on GDAX
Limit orders allow you to specify the exact price at which you are willing to buy or sell. Limit orders give you complete control over your purchases. By placing Limit orders, you can turn crypto price volatility into an advantage rather than a drawback. Always keep in mind that, while Limit orders can be used to boost your returns, your orders may never execute if the market price continues to move away from the specified price. Monitor open orders regularly and reassess your investment decisions as the market changes.
To create a Limit Buy order, first select “Limit” from the order entry menu. Enter the number of coins you wish to purchase then enter the price you are willing to pay. Fig 5 demonstrates an order for 4 LTC at $300 each. Total cost of this trade will be $1,200 if it executes. Be very careful to check your entries. It is easy to transpose these numbers which could lead to an expensive mistake. Once you hit the Place Buy Order, the order will display bottom right portion on web screen or under the “Orders” tab on mobile interface. You can cancel orders that have not yet executed in this section of the screen.
Each time you place a Limit Buy order, the money necessary for execution of that order is placed on hold and deducted from your balance shown on the top left of the page. There is no risk of entering GDAX orders for more than your available funds. Any attempt at doing so will result in an error message. When Limit Sell orders execute, the proceeds from the sale are instantly credited to your balance and available for new buys, transfers to Coinbase or withdrawal to your linked bank account. When you cancel an open order, your available balance will update.
Using Limit Order Advanced Options
When using Limit orders, traders can exercise greater control on the length of time an order will remain in the GDAX order book. These options are found in the Advanced drop down menu. Open the “Advanced” tab and select “Good Until Canceled” to ensure that your order is placed with this option (Fig 6.) You can also set a specific time period for which the order remains open. If you select the “Good Until Time” option, a menu appears allowing you to select one minute, one hour or one day.
The other two options are a little less straightforward. The “Immediate or Cancel” option forces the order to fill immediately. The order will execute at the price you specify, or it will be canceled and removed from the system immediately. If only a portion of the order can be filled when it is placed, this will result in a partial fill and the remainder will be canceled. This type of order is only useful when buying or selling at very close to market price, and typically is reserved for larger orders to increase the odds that the trader will get at least some portion of the order filled.
“Fill or kill” orders force the entire order to execute at the specified price as soon as the order is entered, or it will be canceled immediately. The only difference between this and the “Immediate or Cancel” option is that the entire order must be matched to a corresponding Buy or Sell order on the books. No partial fill can occur. This is also typically used for large orders to somewhat force the price of the order in the trader’s favor.
What does Post Only mean?
When placing Limit orders into the GDAX trade book, you can further limit trading fees by selecting Post Only in the Advanced tab. This forces your trade to execute without Taker fees, which can be higher. Be sure to check your own GDAX fee page in the top right drop down menu since each currency has different trading fees and there are variable fee rebates depending on account trading volumes and length of time account has been open.
Stop and Stop Limit Sells
A Stop Sell order allows you to determine the lowest price at which you wish to sell an asset to prevent loss of value. You can think of Stop orders as a combination of the Limit and Market orders explained earlier. Imagine you own 5 LTC and the current market price quote is $300. You don’t wish to sell but you would like to limit your downside loss of value if the market price declines. You cannot monitor your account 24/7. You cannot enter a standard Limit Sell order below current price because it would execute immediately. This is where Stop orders come into play. You could enter a Stop Sell for 5 LTC at $280. If the price drops to or below $280, the order gets entered as a standard Market order and executes at current best bid price. Note that this could be lower or higher than $280 if market price is fluctuating. To prevent that from occurring, you can use a Stop Limit order. In our example, you may wish to sell 5 LTC if price drops to $280 but only if the market price doesn’t drop below $275 (Fig 7.)
Using a tiered order structure
I’d like to close with a more advanced tip on for both entering and exiting positions. As most readers know, cryptocurrency prices are often subject to fairly significant swings on a daily or weekly basis. Day traders, arbitragers, and short-term investors try to profit from those big moves by moving in and out of positions fairly quickly, often using Limit and Stop Limit orders to increase returns and decrease risks. Long-term buyers and sellers can also take advantage of these price swings by entering Limit orders using a tiered pricing structure.
In order to do this, divide the amount you wish to invest into smaller portions. If you wish to buy $1,000 worth of LTC, for example, and the current trading price is $300, consider placing four Limit buy orders each at slightly different prices. You may want to place a Limit Buy order for 1 LTC at $250 and Limit Buy orders for smaller fractions of LTC at $265, $275 and $285 each.
If you are uncomfortable with the risk of missing out, you can place the orders at smaller price increments closer to the current last trade. For example, you could place Limit Buy orders for $275, $285, $290 and $295 until your orders total up to $1,000 worth if executed. Remember, you must enter Limit orders by specifying the amount of coins you wish to buy. You can track the cost of each order under the order entry boxes. If an order exceeds your available funds, you will get an error message and the order will not be placed. Your open orders will display on the bottom right section of the trading screen or under the “Orders” tab on mobile interface. You can cancel open orders at any time if they have not executed. Figure 8 shows a sample tier of open Limit Buy orders for LTC at various prices.
You can also use this method to your advantage when it comes time to sell some or all of your crypto holdings. You should always have some idea of your investment goals and target prices when you first buy any asset. When prices reach your targets, you can certainly lock in gains using Market orders. But you should also consider placing tiered Limit Sell orders for portions of your holdings at slightly higher prices. This allows you to both lock in some gains near current price while also keeping some exposure in case prices continue to rise. Of course, just like a tiered buying structure, your orders will not execute if prices begin to fall and continue their decline without reaching your price targets. You should always monitor the markets and adjust your order tier as needed.
Final words on entering GDAX orders
Coinbase account holders have access to the underlying trading exchange GDAX. Opting to use GDAX for buying and selling cryptocurrencies not only saves money on fees as we discussed in the companion article on GDAX (Trading on GDAX: Getting Started) but also allows the investor or trader much better control over pricing and timing when buying or selling cryptocurrency. Using Limit orders can reduce your entry price and help boost your investment returns, but at the risk of missing out if prices continue to move away from your Limit order pricing. You can further bump return and increase order execution odds by placing tiered orders at several different prices. Be sure to regularly review your open orders and adjust prices to keep up with market changes or due to changes in your investment plans. Happy investing.
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