How to use Coinbase Pro

Sam, Coinbase and Coinbase Pro allow you to move back and forth without much hassle, right? And you can move over here and you can save on fees. So that $14 fee or that $200 fee you saw now will be like a few cents or a few dollars at most. So I like to trade when I have time. I move it over to Coinbase Pro, I make the trade and I send it out from there because I'm going to save a lot on fees. So I go into USDC to save on fees and then I move to Coinbase Pro to again save on fees, because they're going to give you a better tier because it's a professional trading platform. There's what's called maker and taker fees. They're going to give you a better execution and fill. You can actually pick all that. I'll show you how to do that in a minute. As opposed to just taking whatever they offer you. So I'm not withdrawing, I'm depositing. I'm depositing USDC from coinbase.com and then you can see that there's funds on hold right now. So they're not going to allow me to deposit, but if they did, it'd be free to move it, and then once it's in here, I would be able to trade it for a lot cheaper. So let's just. Let's just simulate a trade real fast and let's just say I wanted to buy usdc, right? So you can go USDT to usdc, you can go to eth, Etc, you can buy it on, like I said, Coinbase and move it over. Right now they're just limiting moving it over. But let's say I had Coinbase. I'm sorry, let's say I just had USDC here. I could go in and purchase it for whatever the market will bear right now. And this is Coinbase and this is Bitcoin. So it's highly liquid. There's a lot of transactions happening. So the likelihood that you're going to get screwed on a bad print or a bad fill, the spread is pretty thin here for a $65,000 asset, so you're probably not going to get hurt too bad. So basically, the way you do this if you go to buy is you can actually select your limit amount, right? And then you can go and select it off of the chain. So if I want to buy, I just click the amount. Like, let's say I wanted to buy a whole Bitcoin. I might have to crash through the order book a Little bit. So I'd go up about 10 and that would set the price. And then I could crash through this whole order book here. You could also just do it at market and it'll buy whatever's on the market. It'll do that for you. The risk of this is if you have an illiquid coin that has a very widespread, you have a chance of being front run by bots and end up paying a lot more. Do you understand what I mean when I say that? Is that clear or should I explain it a different way? Explain that just a little more. Yeah, yeah. So what we're looking at here is essentially level two. So you have the level two over here, which is buyers and sellers and they're making a market right now. And some of these orders are real and some of them are fake. And we kind of distinguish them between retail orders and arbitrage orders. And what the arbitrage and bot orders are trying to do is to get bots micro pennies in spread. So they're basically spoofing the order book all the time with offers that aren't real in order to bait people into buying or selling and then front running their transactions and making a margin on those transactions. And they do this hundreds of thousands of times a day and it's like for fractions of a penny, but it ends up being millions of dollars. So that's their strategy. And they've done this in the stock market for a long time too. I actually used to work with a guy named Heim bodek at my first fund 10 years ago. One of our partner funds he was working with and he was the guy that kind of called the whistle on algorithmic and proprietary trading. That's what he was doing. And then HFT came in and started to eat his lunch and he called the whistle on that and he wrote a book about it. So it's a whole bunch of things. You can read about it like Flash Boys and a couple other books that talk about it. But the general consensus is most of what you see on this order book is bots trading back and forth. And they only confirm transactions. They'll only actually keep their word and buy or sell if they can make a margin. So they're basically spoofing the order book. That's why it's all like this. But you'll notice the actual transaction history is pretty slow. This is what's called the tape. These are the real transactions that actually happen that are reported to the tape. So anything that actually happens over here and these people Figure out a deal will end up on the tape over here and you'll notice that they're pretty slow. They're happening, you know, every 10, 15 seconds. Meanwhile, there's a lot of posturing over here. So don't get too confused about this. The point that you need to understand is that if you want to buy, you gotta. You gotta find a seller. And you have to find a seller that has enough volume on offer for you to make a market and actually make a trade, which will happen over here. And then if you want to sell, same thing on the other side, right? You have to find a buyer willing to pay whatever price for whatever amount of volume. And that's how you get it in and out of the market. So this is essentially what you're doing over here when you go and buy, let's say bitcoin again. So if I go to buy bitcoin and I want to buy 20,000 worth of Bitcoin, that's about a third of a bitcoin, a little less and preview buy it, they're going to charge me a fee of $300 to essentially do that, what I just described. Or I can go over here and I can select up a little bit. These are maybe if I buy a third of a bitcoin, I'm going to have to go up maybe 10 or 20 orders in the order book on my limit. And then I want to buy, let's say, I don't know, 0.3 BTC. I don't have enough money to do it, but they're only going to charge me a $68 fee. So I've already saved myself $200 in fees just by moving the money over to their platform, that's a professional platform, and doing it myself. That's a pretty good savings, right? You do a lot of trading, like 200 bucks a pop. That's going to be significant pretty quick. Not to mention you want to limit gas fees and all that stuff we'll talk about in a different video. But essentially what we're talking about today is how do I get a better price for the coins I'm going to buy already? So thing one again, just to recap, you're going to buy usdc, you're going to season it so you can move it over to Coinbase Pro, and then you're going to buy on the actual open market and set your price yourself. And if you're patient, you can usually get better deals here than you can on the regular market because they're guaranteeing a price, but they're adding a premium to make sure they don't get screwed. So they'll honor this price that they quote you. But just like you, they're buying on the open market for you, right? So they're doing this for you, but they're adding in a margin of a larger fee. That extra 200 bucks covers their downside, so in case they end up having to buy higher than that, they make out on your trading fee. And if they buy lower than that, then they get an additional profit in real time. And when you transfer this, there's 80, what, 80 million accounts on Coinbase. When you consider how big that margin is. A few hundred bucks or even a few bucks per clip per day is billions of dollars over the course of a year. So it's worth doing for them. It's worth doing for us, but we're a little less lazy. We're learning how to do this right now. I don't typically trade a lot of volume on here. I did when I had a bot working. I didn't love the strategy we were doing on the bot. It's not quite where I want it to be yet, so I wanted something even more advanced. So I started moving things over to Gate, which is what I'll cover next. But I want to just pause for a second and see if JJ has any questions to see if we missed anything or anything's unclear about what I just described. So it'd be the same thing for Ethereum. Here's the price action. Here's the tape. Well, the price action's on the tape. This is what's actually happening. Here's all the orders that you can look at, and you can make your market yourself. And if I was to buy one ETH here, so let's see what that would be. Buying ETH market. So it'd be about 4,500 bucks. I would be charged $15 over here versus if I bought ETH on Coinbase. Let's do one Ethereum here. Come on. They're going to quote me. What was it, like, 14 bucks? Yeah, 70 bucks. So you're paying five times the premium just to have the benefit of not having to think. So how many thousands of dollars have you probably wasted by purchasing direct or not purchasing USD first or any number of other things. Now, if you're in a rush and you just want to buy it and you want to pay the fee, that's fine. I do that too sometimes if I'm in a rush. But remember, if you have patience, you can wait and save a lot of money. So before I move on to gate, jj, what questions you have about this? So my only question on Coinbase Pro, what's the difference between a limit and a stopped purchase? Great question. Okay, so limit. So a market price is what we just described, right? It's just buying whatever the market has right now available, assuming that they're not spoof orders. You'll get the real orders, the retail orders will come through and you'll buy them or sell them. When you put in a stop order, you're basically saying that I have this position and at some point, whether it be high or low, I want to either take profits. If it's on a buy, right, and it's gone up or. So there's always two sides of a market. There's always a buyer and seller. So let's say I'm on the buy side, I bought eth, I think ETH is going up. So now I want to make sure that anytime I enter a trade and we'll talk about trading a little bit more in depth, I have a few things figured out before I get into this trade and I'm clear on what they are. I want to know what my entry price is going to be thereabouts. I want to have a clear entry price. I want to know what my stop loss is going to be. I want to know what my target price is going to be. So I want to know where am I getting in? What's my upside potential? What am I aiming for? What do I hope this thing is going to do and what's my thesis? And what am I getting out right at that price or getting out some there and maybe letting the rest ride or whatever it is you're doing, but you have a plan. And then where do I decide I'm wrong? If I come in and like, oh, this thing dropped, I was wrong on my entry, where do I cut my losses? So if you don't have those three things figured out before you trade, you're trading emotionally or you're trading non intelligently, I'll just say, right, you want to be intelligent about the way you trade and you want to consistently make trades with that in mind, Right? Those three things in mind. Where's my entry point? What's my stop loss? What's an acceptable stop loss as a functional percentage versus how much I intend to gain? So if I'm shooting for doubles, I want to maybe have a 20% stop loss, because 5 to 1, that's a pretty good asymmetric risk reward ratio. So these tools like the stop loss can help you to do that without you being there. And they're more robust on gate and you'll see what you can do in a minute. But they're also dangerous because if you put in a stop order and that gets hit, you're going to get stopped out at market prices. So if you're in free fall or there's a bad print and eth dips out for just a half a second and triggers your stop loss, you might get stopped out well below what you thought you were going to get stopped out at. Right. Because it's not necessarily a limit order. Right. It's usually a market order. And some of them allow you to set a limit order for your stop, which is safer. But then if the market moves away from you too fast, you may never get filled. So it won't actually stop you out. So there's a couple of considerations that you only learn the hard way afterwards. So you can stop on the way up there. It's called a take profit order. You can stop on the way down. That would be called a stop loss order. So I don't want to lose any more than this. But then the stop loss order could also fill at market and screw you. Or it could not fill at market and fill at limit and you may not get filled, which means you're still in the trade if it went way below your thing. So especially with how volatile crypto is, sometimes these assets can fall 30, 40, 50% in a minute and maybe they rebound right away. And now you're out of the trade and you would've lost 50% maybe, because you're out of the trade. Now somebody else is riding your high because now it only really dipped 5% or 10% when it recovered because one bad candle can put you out of the market. So this has happened to me a bunch of times, and I've basically come to the conclusion I don't want to be liquidity for these wealthy whales, what we call them, to come in, tank the market, grab all my shares cheap, and then rip it up again, or grab all my crypto sheep and then rip it up again. Because that always happens before a big move. So a lot of what you're doing as a trader, especially if you're using leverage, is managing your positions or don't use leverage, because leverage is where people get messed up. They use leverage, they get liquidated, or they stop out and now they're at a loss. But they were still right on the trade and the timing they got punked out. They got pushed out by people who sell and create panic and then buy cheap, get all leveraged longs out of the market, and then they rip it. So that that kind of explains the stop. And you'll see it even more clearly. This is not as robust as what we have over at gate, but does that kind of answer the question for now? Very well. Okay, awesome. Sa.