How to Buy and Sell Cryptocurrency Without Paying Fees
The page will focus on using Coinbase/GDAX to avoid fees, as this is a method [almost] everyone in the U.S. can use. With that said, there are other exchanges that allow you to trade without fees or with low fees as well (to do your own research Google “fee schedule” + “the name of the exchange”). For example, see Kraken’s Fee Schedule.
NOTE: In general this process should result in you not paying any fees. With that said, things like bank wires or living outside the U.S. can result in small fees (as can other things like buying/selling at market price). In cases where some fees will be paid using the below method, I would phrase it as: “a way to trade currency with paying only a minimal amount of fees.”
Why does this matter? Most (if not all) user-friendly ways to buy cryptocurrency involve paying rather hefty fees. For example, if you have a coinbase account, you probably have already realized that buying cryptocurrency via the basic interface means paying fees (at least 1.4% per buy and 1.4% when you sell). That means you have to not only make money on cryptocurrency, but have to at least make an extra 3% to pay off coinbase before you see a profit. That isn’t ideal, so we tell you how to avoid that.
How to Use Coinbase/GDAX to Buy/Sell Cryptocurrency Without Paying Any Fees
The gist below is that you are setting up both Coinbase and GDAX, funding your account in USD, and then using limit orders on GDAX to trade. After that you can use a platform like Shapeshift to change Bitcoin, Litecoin, or Ethereum into other altcoins like Ripple and Dash.
This isn’t the only way to trade cryptocurrency without paying fees, but it is essentially the simplest and most user-friendly option (especially in WA and NY where choices of exchanges are limited due to state regulations).
To trade cryptocurrency without paying any fees:
- Sign up for coinbase (click that link for instructions and a link that will net us both $10 in Bitcoin). NOTE: You’ll need to at least attach your bank account (so you can withdraw and deposit money and verify yourself). You’ll probably also want to upload your ID. Verifying your identity via an ID and bank account will expand your withdrawal limits and spending limits and such.
- Sign up for coinbase’s GDAX (click that link for instructions, coinbase and GDAX use the same login).
- Deposit money into Coinbase or GDAX (use a bank wire and pay a small fee, but get access quick and avoid limits, or do a deposit and wait about 4-8 days and pay no fee, but face a limit of likely $200 – $5,000). NOTE: There is no difference from what I can tell between depositing into Coinbase or GDAX.
- If it is that you deposited into Coinbase (and not GDAX), then transfer your funds from your coinbase USD wallet to your GDAX account by clicking “deposit” in GDAX (on the top left under “balance”). NOTE: Go to “deposit,” the button right next to “withdraw,” select the “coinbase account” tab, change the “source” to your USD wallet, and hit “withdraw” funds. All withdrawals and deposits are instant and free (same is true for moving coins between accounts).
- Now buy and sell your coins in GDAX. To avoid all fees you must only buy with limit orders and “let the order sit on the books.” In other words, you can’t buy/sell too close to current price (as that could trigger a fill or partial fill of the order immediately and result in a fee). In simple terms, if your order sells too quick you pay a “taker” fee. NOTE: GDAX is intimidating to get used to, but ultra simple to use. Just turn of margin trading, set limit orders, and double check numbers before you hit the “place an order” button. See our page on GDAX for more.
- Once you have USD from your coin trading on GDAX, “withdraw” your USD from GDAX and put them in your USD wallet in Coinbase (do not withdraw coins from GDAX and sell them on coinbase unless you want to pay the 1.4% fee; you must sell them on GDAX). NOTE: Go to “withdraw,” the button right next to “deposit,” select the “coinbase account” tab, change the “destination” to your USD wallet, and hit “withdraw” funds).
- Now from coinbase go to “accounts,” go to your USD wallet, and hit “withdraw” to withdraw to your bank account.
And that is it, GDAX was your exchange, coinbase was like your “home base,” and the grand result is that instead of paying a 3% total fee or more for every buy/sell combo, you have now traded cryptocurrency paying no fees at all. Pretty sweet!
Considering we just potentially saved you some money, consider Sending some coins to one of our wallets below:
NOTE: We didn’t create the video below, but it pairs well with the page.
How To Stop Paying Coinbase Fees.
TIP: The above isn’t to say one should never use coinbase, I do personally (and when I do, I have no problem paying the fees for the ease of use and risk they are taking in terms of market volatility in doing my trade for me). First off, Coinbase has an app and GDAX doesn’t, that means one you can manage on the go, and the other you can’t. With that said, I only do this when the situation calls for it (for example, if the price of BTC dips, I only have my phone on me, and my limit orders aren’t set to take advantage of the dip on GDAX). In other words, one could say that theoretically the goal would be for 95% of your trading to be done on GDAX with limit orders, 2.5% on GDAX with market buys, and 2.5% on coinbase. Where that 5% represents situations where sitting at a desktop and being methodical isn’t an option.
TIP: Market buys on GDAX cost about .3%, that is way better than 1.4%. Still, 0% is better. Unless the market is going nuts, there is almost never a good time to do a market buy.
ADVICE: To get your feet wet, you may want to just use coinbase. Then when you get to GDAX you may want to try a few market buys. Once you start buying for real though, do yourself a favor, focus on GDAX and limit orders (using coinbase, market buys, and stops only when necessary).