Coinbase

An in depth look at the Coinbase bitcoin exchange

Coinbase is one of the top rated bitcoin service providers on the market, and they have been very good at bringing on new users to bitcoin with their easy on-ramp of tools and resources. They also have received the most venture capital funding in the space, giving them an edge over many other bitcoin startups.

Most recently, they launched their official bitcoin exchange, which traders can buy and sell bitcoins using their trading platform; in the past Coinbase acted as a bitcoin broker, where users could buy and sell, but didn’t have any of the trading platform features that it has now.

In this article, we will walk-through some of the main features of the Coinbase exchange, highlighting areas of importance and utility to help new users understand how the exchange operates. In fact, many other bitcoin exchanges operate in a similar way.

The first thing you will see on the Coinbase exchange is their charts. Coinbase offers a few different charts such as price candle charts and line charts, as well as a depth chart for their order book. Pictured below are the price candle and line charts.

coinbase-charts

One major difference between the candle chart and the line chart is that the user selects the time interval the each candle will represent, the full time window displayed is then determined by the size of the candles.

John Mardlin at Coinbase explained this quite well. Each candle presents a simple summary of the bitcoin price action during a given time interval:

  • A solid red candle represents an interval in which the price was higher at the open, than at the close.
  • A hollow green candle represents an interval in which the price was lower at the open, than at the close.
  • The thin lines extending above and below the candle represent the highest and lowest price during the interval.

coinbase-candle

Each of the elements in the candle chart, are a visual representation of the data displayed in the trade history table on the left of the candle and line charts. In the trade history table the color of the price reflects whether or not the trade was made on the buy or sell side of the order book. Prices shown in green take liquidity from the sell side, and are an indication of buying pressure. Prices in red are the opposite. The sizes of a trade are represented by grey number in the left hand column, and also by the length of the red or green volume bars along the left hand side of the table.

Coinbase open order book and depth chart

Coinbase has a depth chart, which is pictured below. Looking to the right of the chart, you’ll see the orders on the sell side of the order book, shown in red. The chart is cumulative, so the height of the line at a given sell price represents the value in BTC of all sell orders at that price or a lower price. The buy side of the chart, shown to the left of the mid market price in green, works the same way. Hovering over a spot on the chart shows the number of BTC that can be bought or sold for a given price.

coinbase-depth-chart

Placing buy and sell orders on the exchange

Coinbase offers “maker” and “taker” orders.

  • Taker orders remove liquidity from the market. They are matched with existing orders already on the order book, and filled instantly. Taker orders incur specific fees which may vary; see Coinbase for exact fees.
  • Maker orders add liquidity to the market. Their orders go to the order book and will either be used to fill other orders, or else cancelled at some point in the future. Maker orders havecurrently have no fees.

Coinbase offers two types of orders, “market” orders and “limit” orders.

  • Market orders are filled immediately at market price while limit orders are filled at a minimum (for sell orders) or maximum (for buy orders) price you specify and therefore may not be filled right away.
  • Limit orders offer a few more options than market orders. To place a limit order, go to the “Limit” tab and enter the size of the order as well as the desired price.

Pictured below is an example of a market order being placed for .01 BTC. You have a few options such as “Good ‘Til Cancelled” where the order stays until filled or cancelled by you, “Immediate or Cancel” where if any part of the order is not immediately filled completely, it will be cancelled automatically, and “Fill or Kill” where the entire order is filled or cancelled. Once an order is entered, it shows up in your Open Orders section of the dashboard.

coinbase-order

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david@bitcoin.com'
David is a writer, researcher, and developer who is passionate about bitcoin and blockchain. He writes for Bitcoin.com, Blockchain.com, and is the founder of Bitcoinx.io (which was acquired by Bitcoin.com). David previously used to write and curate for Myspace and has worked in the fintech and payments space for over 15 years.