Understanding Automated Trading on Coinbase Pro

Table of contents

Coinbase is a San Francisco-based cryptocurrency exchange founded in June 2012 by Brain Armstrong and Fred Ehrsam. It is one of the oldest, largest, and prominent exchanges offering a digital wallet in combination with a trading platform. In 2021, Coinbase became the first crypto exchange to go public following its listing on the NASDAQ.

Coinbase is regarded as a market leader in digital currency exchanges alongside Binance. Coinmarketcap ranks it as a top exchange worldwide in terms of traffic, liquidity, and trading volume. It currently has over 68 million verified users and has recorded quarterly trade volumes to the tune of $460 billion. It is fully regulated and has an operating license in all US states, except for Hawaii. Nine thousand institutions and 160,000 partners in over 100 countries trade, invest, earn, save and use crypto on the platform.

The platform offers cryptocurrency investing, an advanced trading platform, custodial accounts for institutions, a wallet for regular investors, and its own US dollar stable coin (USDC).

Manual and Automated Trading with Coinbase

Users can take advantage of the easy-to-use platform that is accessed easily via browser or apps for Android or iOS devices, including Coinbase Pro - its more advanced trading platform. It provides a straightforward on-ramp process to cryptocurrency investment for individuals who are just getting started. The user-friendly interface, educational materials, and robust security measures make Coinbase an excellent alternative for trading and crypto investment. Users can purchase, store and monitor the value of their coins over time.

Coinbase Pro is the proprietary webtrader, offering users a trading terminal with proper research tools, an order book, and a trade history. It allows advanced traders to trade manually and deploy third-party automated trading services including trading bots using Application programming interfaces (APIs) as they see fit. Users can place market, limit, and stop orders at a cheaper commission fee and trade margin using sophisticated charting tools.

However, Coinbase Pro is a different exchange, and users can move funds between their standard and Coinbase pro accounts. Furthermore, Coinbase Pro has cheaper fees than the ordinary Coinbase exchange while offering more options, albeit at the expense of a more intimidating user interface. All this combined makes Coinbase Pro a more favorable option for deploying automated bots, especially those benefiting from high-frequency trading.

User Interface

Coinbase offers a very clear, easy-to-use layout that is clutter-free and simple to navigate. Its dashboard displays portfolio holdings, price charts, and recent trade activities at a glance, with quick access to trading tools, features, and account settings found on the side. Apart from fiat purchase functionality, Coinbase's interface is one of the key reasons it is a good pick for crypto novices.

Source: Coinbase

Coinbase Pro leans fully into Coinbase's clean and uncluttered design and user interface. It features a dark theme and is clearly divided into different sections. As seen above, on the left-hand side, you can choose a market type, view your balance and place different types of buy and sell orders. The central area has the order book and price chart. Open orders can be seen beneath the chart. Meanwhile, the right section contains a list of trade history.

The user interface is intuitive and suitable for anyone looking to go beyond just buying crypto with fiat as with the standard Coinbase account.

Source: Coinbase

Available trading pairs

Coinbase offers more than 70 popular cryptocurrencies which users can trade and invest in. The available coins, however, have varying trading limits and withdrawal maximums/minimums. Certain coins can only be traded for fiat, while others can be traded to and from other cryptocurrencies. Also, depending on your country of residence, restrictions may exist on the trade of specific coins. All this information can be found on Coinbase's asset directory.

Bitcoin (BTC), Ethereum (ETH), Uniswap (UNI), and Dogecoin (DOGE) are some of the more popular coins found on the platform available for both automated and manual trading, with notable absentees being Polkadot (DOT) and Binance coin (BNB).

Trading volumes

Coinbase currently has a quarterly trade volume exceeding $460 billion for the second quarter of 2021. This is a significant increase when compared with previous quarters as seen in the chart below. The number of monthly transacting users (MTU) also increased from its previous high of 6.1 million recorded in the first quarter of 2021. High liquidity generated by these trading volumes allows users who utilize automated bots for trading large volumes of crypto to rest assured that all orders won’t hang up due to insufficient supply or demand of certain assets.

Source: Techcrunch

The value of invested assets on the platform saw a slight decline of $43 billion due to the decline in prices of cryptocurrencies in the intervening period. Increased institutional and retail investments on the platform enabled Coinbase to record these ridiculous figures for the quarter.

Trading fees

Coinbase trading fees are a major disadvantage to it when compared with other exchanges. The fee structure employed on the standard Coinbase account is expensive, but this is not so on Coinbase Pro. The value of fees also depends on location, payment method, and the number of trades carried out by users.

Coinbase Pro makes use of the maker-taker fee structure to determine transaction fees. Maker orders, which generally provide liquidity, are charged separate fees from Taker orders. When placing an order, the pricing tier you are in is used to determine the fees to be paid and not the tier you are in after the trade. This must also be considered when choosing a grid step before launching any trading automation.

A user is charged a fee between 0.04% and 0.50% for a market price order that gets filled instantly. An order not immediately matched is placed on the order books. When another customer places an order that matches the first order, the initial user becomes the maker and is charged fees between 0.00% and 050%. Fees accrued to Takers are based on the trading volume of the US dollars over a 30-day trailing period across all order books on the platform.

Coinbase Pro fee structure

Security policy

Coinbase is one of the safest exchanges in existence. Security features employed have ensured that it is hack resistant. Most of its customers' funds are stored in cold wallets and are not susceptible to online attacks. Only about 2 % of cryptocurrency is left online to facilitate trade volume. Backup drives and paper wallets are also used and are distributed across the globe in vaults and safety deposit boxes.

FDIC Insurance is also provided for cash holdings to the sum of $250,000 held in Coinbase wallets. This insurance does not cover cryptocurrencies; hence users would need to take precautions when storing their holdings. The policy does not cover losses that occur due to unauthorized access to personal accounts.

Other security features include; 2-step authentication, biometric logins, and data encryption. The platform strongly urges users to enable their 2-factor authentication to prevent unauthorized access. This is also necessary when using third-party automated trading bots like Bitsgap.

Know your customer policy

When setting up an account with Coinbase, new users would be required to submit their personal documents to verify their accounts. This is in compliance with KYC regulations to prevent the creation and use of fraudulent accounts. A government-issued identity document such as a Passport or driving license is required in the verification process.

An incomplete verification process would cause restricted access to Coinbase services and products. Once completed, users would be able to use the full range of Coinbase services.

Using Bitsgap bots on Coinbase Pro

Bitsgap is an automated trading platform that provides its users an all-in-one cryptocurrency trading platform. It allows them to enjoy the benefits of automated trading when managing their cryptocurrency portfolio. Integrated with over 25 crypto exchanges, including Coinbase Pro, Bitsgap automated bots give traders a secure and effective automated trading platform choice.

Traders can connect their Coinbase Pro account with Bitsgap using API keys. This allows them to deploy Bitsgap's proprietary trading bots or create custom bots to carry out automated trades on their behalf.

Creating API keys on Coinbase Pro

To effectively use Bitsgap trading bots on your Coinbase Pro account. It is necessary to create an API and link it with your Bitsgap account.

To create an API key on Coinbase, follow these steps:

  1. From the Coinbase Pro dashboard on the website, select the menu tab in the top-right hand corner.
  2. Click the API link from the dropdown options.
  3. Under profile information, click the API settings tab and create a new API key.
  4. Select your profile and needed permissions, make a secret passphrase and input your 2 FA authentication code
  5. Finally, click the create API key at the bottom of the make a unique key dialogue box. Your API key and secret phrase will be displayed on the settings page. Record and store them in a seсured location.

Integrating Coinbase Pro with Bitsgap automated trading bots

After creating your API key, all that is left is integrating it with Bitsgap. The steps to do so are as follows:

  1. Login to your Bitsgap account
  2. Click the My exchange tap and select Add Exchange
  3. Select Coinbase Pro
  4. Input your API key and secret passphrase
  5. Click connect
  6. It is done! You can now use all advantages of Bitsgap crypto trading bots on your Coinbase Pro account.