This quick start guide covers the basics of creating orders to trade cryptocurrency on an exchange. For more detailed coverage and more advanced order types, see the Investing tab in the site menu.
Step 1: Get your crypto to the exchange.
If you directly deposited USD to Kraken, Coinbase/GDAX, or any of the other exchanges, you’re ready for Step 2. If you used localbitcoins, you’ll need to create an exchange account and send your crypto to the exchange before trading. Part 6 of the guide covers sending and receiving cryptocurrency.
Step 2: Create an order.
There are two types of basic orders, market and limit. I recommend using limit orders because they guarantee the price you’ll buy a crypto for. On GDAX, trades are entered in the lower left-hand side of the screen.
MARKET ORDERS: Market orders are immediate and you end up purchasing your crypto at whatever the market price currently is. That’s fine if you think the price is only going up, but crypto is volatile and if you think the price might go down, use limit orders instead.
Notice that market orders only allow you to choose how much the trade will cost, but you are unable to choose the price at which you would like to trade. However, market orders are executed immediately, so in this case you would be buying $300 of Bitcoin at around $10,438.
LIMIT ORDERS: Limit orders allow you to buy or sell an asset when a price reaches a certain level.
For example, let’s say you’re looking to buy .5 ETH. But, ETH is currently trading at $320 and you think it’ll go down to $315. Set a limit buy order as follows, and the order will execute if the price of ETH moves down to your limit price.
Or if you’re looking to sell .12 BTC if BTC reaches $9,000, create a sell order:
While there’s no guarantee the asset you’re trying to buy will hit the price you choose, limit orders offer more flexibility in trading and keep you from having to constantly watch the market for good buy and sell prices.
Continue the guide with Part 6: How to Send and Receive Cryptocurrencies
For more advanced orders, see Trading Tips: How to Use Stop and Stop-Limit Orders.
Interested in basic purchasing strategies? Check out Fundamental Tips & Strategies for Investing in Volatile Crypto Markets, or how to Use Ladder Orders or Use Dollar Cost Averaging to minimize risk.
If you are holding more than a few hundred dollars of crypto, learn Why You Should Be Using Two Factor Authentication, or 2FA.