- Ready to invest in the crypto growth story without buying crypto?
- Help choose a stock trading platform where you can buy Coinbase stock.
- Learn how to enter your first trade.
Coinbase (NASDAQ: COIN) is the largest regulated American cryptocurrency exchange and the first to go public in the sector.
If you want to ride the wave of the crypto craze, this guide unpacks everything you need to know about buying stock in the company.
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Company overview
With cryptocurrency returns setting records, more people are getting into crypto every day. Coinbase was the hottest IPO of 2021 and yet the biggest disappointment. The company failed to hold its reference price of $35 at launch.
However, with a massive valuation and a growing cryptocurrency market, COIN offers you the chance to invest in America's largest cryptocurrency exchange and get exposure to crypto without actually holding any specific coin.
Where to buy Coinbase stock
On website
eToro USA LLC and eToro USA Securities Inc.; Investing involves risk, including loss of principal; Not a recommendation.
eToro
Highlights
- Zero commissions for trading ETFs and stocks.
- Start Fractional investing with as little as $10.
- Practice investing with a $100k virtual eToro account.
Disclaimer: eToro securities trading is offered by eToro USA Securities, Inc. (‘the BD”), a member of FINRA and SIPC. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Finty is not an affiliate and may be compensated if you access certain products or services offered by the BD.
On website
Robinhood
Highlights
- No account minimums or commissions.
- With a dedicated team of customer support professionals that are available to answer your questions.
- Robinhood Financial and Robinhood Securities are members of SIPC, which protects securities customers of its members up to $500,000
Pros
Cons
On website
Highlights
- Get up to $300 of free stock when you create an account. Terms and Conditions apply.
- Invest in popular ETFs from Vanguard, BlackRock, and others by the slice, and do it without commission fees..
- Unlock advanced data, unique market metrics, and analyst insights when you upgrade to a premium account.
- Investments made in Public are insured for up to $500,000.
On website
Highlights
- Trade blue-chip stocks in US, HK and SG Markets.
- Wide array of investment choices such as stocks, stock options, futures, ADRs, Exchange Traded Fund (ETFs) and REITs.
- Manage your assets, portfolio and investments across multiple markets.
Compare stock trading platforms with Finty. Research broker fees, commissions, tradable assets, markets, and commodities, etc.
Step 1: Pick a stock broker
To trade Coinbase stock, you need an account with a brokerage firm. Here's what to look for when assessing prospective brokers.
No-commission trading
If you have a small account, commissions can make it hard to grow your balance. With brokers offering zero commissions on trades, you can trade more frequently while saving more of your profits.
Fractional share trading
If you have a small account with a $300 balance, you could afford one share of COIN at most, and it would use a considerable amount of your account's balance to buy the shares. Risking your account on one company is dangerous; what if the trade goes the wrong way? Fractional shares give you exposure to COIN price action at a risk level you can manage while also giving you the capacity to invest in multiple companies.
Low account fees
Brokers want your business, and they compete with each other for it by offering different fee schedules. Before signing up with a broker, shop around for the best prices on fees.
Margin trading
When you open your trading account, you have the option of selecting a cash or margin account with the broker. A cash account lets you trade the cash balance of your account. If you use all your buying power in a single day, you'll have to wait a day for the clearinghouse to process your trades.
To get around this issue, your broker offers you a margin account. With margin, the broker is supporting your trading by “lending” you funds. The broker also gives you the chance to use "leverage" on your account balance so you can buy shares worth 3x or even 6x your balance. If a margin trade goes against you, be prepared to deposit more money to cover any maintenance margin required by the broker.
Real-time data and charts
Your broker issues your charts with your trading platform. Beginner traders will find the charts user-friendly, making for a pleasant trading experience. However, they lack real-time data, and your quotes come delayed by up to 15 minutes. You'll need to purchase real-time market data separately if you want live prices.
Step 2: Transfer funds to your account
Brokers accept debit cards and wire transfers for trading account deposits. Depending on who you go with, it might take several days to set up and fund your account, as the broker needs to verify your identity to meet financial regulations.
Step 3: Decide how much to invest
When funding your account, it's a good idea to use funds you can afford to lose. Depositing your kid's college fund into your trading account in the hope of tripling it overnight is a bad move.
For instance, when Coinbase IPOed in April, it experienced a huge sell-off to the $250 reference price in less than a month. If you had your life savings in that trade in the hope of it "mooning," you would have ended up taking a big loss.
Remember this – the market can remain irrational longer than you can stay solvent.
Step 4: Choose between shares of stock or ETFs
After deciding on your risk tolerance, you have the option of buying shares in COIN outright, or you can use an exchange-traded fund (ETF). ETFs are financial vehicles containing the stock of several companies that participate in the same sector of the economy.
Cathie Wood's ARK Innovation ETF (ARKK) is an example of a vehicle giving you exposure to COIN price action. ETFs are typically less volatile and the better choice for swing trading.
Step 5: Set up your order type
Traders use the following order types to manage their trades.
Market order
This order lets you get into Coinbase stock at the next available price. However, you might not get the price you were expecting. You might want to enter COIN at $100, but the market order might fill at $105 or $110 if the price action moves fast. This excess $5 or $10 that you paid over the price you expected is known as slippage.
Limit order
This order eliminates slippage. It only fills at a specified price. However, if the price action moves quickly, your order might not fill, or the broker might give you a partial fill.
Stop limit
With this order, you can sell your stock automatically when it reaches your price target. For example, you buy COIN at $100 with a price target of $120. When the price meets your target, the broker sells your shares, returning your realized profit to your trading account.
Stop loss
This order acts as a risk management tool for new traders. Most traders should risk more than 5% to 10% of their account on any trade. Before you enter your trade, you'll identify your entry.
You set the stop loss at 5% to 10% below your entry price, depending on your risk tolerance. If the price falls to that level, the brokers liquidate your position, limiting your total downside in the trade.
Step 6: Submit the order
After selecting the right order type to match your trading strategy, you're ready to buy Coinbase stock. Load your trading platform and enter the COIN ticker. Populate the other fields with your order type, limit price, and the number of shares or fractional shares you want to buy.
Click the buy button to get into Coinbase stock, and click the sell button when you want to exit your position, hopefully with a profit.
Step 7: Monitor how Coinbase performs
As the first crypto exchange to IPO, Coinbase is heavily subject to news in the crypto-sphere. Any change in crypto regulations can cause the price to move. Moves in cryptocurrencies like Bitcoin and Ethereum can also play a role in dictating price action. Therefore, expect price volatility. Stock like Coinbase, which you can track for comparison, include Riot Blockchain (NASDAQ: RIOT), NVIDIA (NASDAQ: NVDA), and PayPal (NASDAQ: PYPL).
Pay attention to press releases and newsletters in the crypto market. A good example would be the European Investment Bank issuing $100 million in bonds using the smart contract, ETH, or Chinese regulators cracking down on crypto trading or mining.
Here's how Coinbase makes money.
