Basic Crypto Beginners - GDAX Fee$ and avoiding them Easy Explained - Market, Limit, Stop, Stop-Limit for Noobs

Hey y'all,

I'm writing a quick (in hind sight "quick" was a poor word choice) post in order to try and help better explain the fee structure on the GDAX exchange after noticing there is still much ambiguity around this subject on the interweb for people just starting out. This is a noob topic so if you've already got a pretty good grip on this don't waste your time reading on...or do and post your own thoughts if I've missed something! Help the community grow, we all win.

INTRO (skip down if you just want the meat and potatoes info...):
For those of you still getting familiar with the trading space or maybe just looking to get into the crypto trading excitement for the first time now that the prices are a bit subdued, let me first say - Congratulations! You're still ahead of the curve. Despite the recent surge in popularity in recent months the masses are still scratching their heads on the sidelines, that is, if they've even heard of cryptocurrencies (you may be surprised by how many people are still in the dark on this.) But those of us that aren't asleep at the wheel know that even though the future direction of crypto$ may be unclear, there is one thing that most can agree on, and that is that they WILL have a future. By now even the biggest naysayers have accepted the fact that they are here to stay. So, moving forward the best thing you can do is to educate yourself, always, because if you don't change with the times you'll just get left behind, this train won't wait. That said, for those who are just dipping their toes in the water it's important to INVEST IN YOURSELF FIRST, learn as much as you can before putting any real skin in the game and NEVER invest your grocery money, savvy?

EXCHANGE/FEE$ - YOU CAN TRADE FEE FREE ON GDAX (if you understand the order types below):
A great place to get started buying crypto currency and prolly the most basic point-n-click ordering can be found on the popular U.S.-based exchange Coinbase [https://www.coinbase.com/ ] I won't go into the details of setting up accts. as there are plenty of other informative posts/vids out there for that. Now as I've said this is a great way to start BUYING if you plan to simply buy some coinage and HODL (for the greenhorns, HODL = Hold On for Dear Life - you've no doubt seen this in your quest for crypto knowledge). Coinbase may be the simplest exchange but you pay a premium for the convenience in restrictively high fees for transactions. For this reason Coinbase is one of the WORST exchanges for performing multiple transaction trading. That's where GDAX comes in. GDAX is a more advanced trading platform that is owned by the same company that owns Coinbase. [More info here: https://coincentral.com/coinbase-vs-gdax-comparison/] Once you've got your acct set up on Coinbase if you've got some crypto $ that's just burning a hole in your digital wallet or you've done your research and believe there's a profit potential opportunity and you're ready to take a more active trading stance you can set up an acct on the GDAX exchange easily, using the same login credentials as Coinbase since they are part of the same parent company, and transfer funds from your Coinbase to your GDAX acct without paying a fee. Again there are many posts/vids to walk you through the process if you need help. On to the point...

THE MEAT AND POTATOE$:
Ok so you're set up on GDAX and ready to make some moves. When calculating your Profits/Losses (P/L) with any investments it's important to take the commissions/transaction fees/etc. into, well, account (pun intended). Otherwise what you predict to be a small profit may end up being a little loss instead. We want to grow our P, not hurt it ;)
Before continuing I encourage you to take a look at the GDAX site for reference to what I am trying to simplify:
[ https://www.gdax.com/fees/LTC-USD ]

Now most of the confusion occurs re: the Taker vs. Maker handles and how they relate to Market vs. Limit vs. Stop-Limit orders and fees. You'll see these 3 order options in the GDAX Order Form:

MARKET ORDER:
A market order means that after you fill in the amount of money you wish to spend and hit that "Place Buy Order" button, your buy order will be filled immediately at whatever the current market best sell price is at. Remember every transaction has a buyer and a seller and they agree on a price in order for a transaction to take place. A market order means there is an existing order placed on the order book (those red/green flashing numbers right next to the order form) that is waiting to be filled, or in other words price-matched with another order. (ie: an existing Sell order at $100 sits on the book, you place a Buy order for $100, the exchange matches the buy order with the sell order and completes the transaction.)

Now most of the time these orders are being posted and filled rapid-fire (thanks Bots!) which is why the numbers are so rapidly flashing and changing all the time. This can be intimidating at first but at ease, if they weren't moving that would mean that orders are sitting on the order book and not being filled (meaning there is not much liquidity in the market) which means that if you were trying to get into/out of a trade you may not be able to (because there aren't many people trading you may be hard-pressed to find someone to match your order price, dig?)
Now keep that idea of liquidity in mind...

MAKERS vs. TAKERS:
This is where the Makers/Takers distinction comes in. As you can see from the fees above it is optimal to stay a market Maker ($0 Fees!) vs. Taker. To be a "Taker" in basic terms simply means that you are "taking" from the market liquidity, or in other words "taking" an order off the order book. When you place an order it is immediately matched with one on the book and filled. You pay a fee. Market orders, because by design they are meant to match with the closest existing order on the book, will always be a Taker fee transaction. Why might you want to do this? Because in a fast moving market environment (read "flash crash!") you just want to get the best price you can before either the bottom falls out and prices dump or maybe you want to get in immediately because the price is surging parabolic. If you wait to pick a target price the market may have moved well passed it before you're able to get the order in, so it makes sense to pay a little fee for the opportunity to get into the position. Now speaking of target trade prices...

LIMIT ORDER:

When you select Limit on the order form you'll notice another box appears for you to enter a Limit Price. In simple terms the Limit Price you select is the price you want to buy/sell at. Say you're eyeballing LTC and it's trading around $180 but you believe it's going to move cheaper. You set a buy order with a Limit Price at $160 meaning if it drops to $160, your Limit order will be placed on the book and provided there is someone else looking to sell it at that EXACT price the transaction will be completed.
*That's important to understand - If you place a Limit Price of $160 and there isn't much liquidity in the market (there's nobody waiting to sell to you at that EXACT price) you still may not get your order filled, or you may be only partially filled. Likewise if the market price is moving fast and it hits your Limit and blows through it you may not get filled (this will come up again under STOP orders). Limit order means you want THIS EXACT PRICE or nothing. This is why the price "Spread" (seen on the order book between the red and green orders) is important. Spread is simply the difference between what price people are selling at and what price people are buying at ($0.01 in the pic above). This means the price is stepping up/down by increments of $0.01. If for example the spread were $0.02, and you have a Limit order placed at $160.27 - meaning you want your order filled at that EXACT price - the price may step right over your order ($160.30-$160.28-$160.26-$160.24...) and you won't be filled because it didn't hit your Limit. (In the cryptosphere this is highly unlikely as it is such a liquid market but worth mentioning nonetheless. A more likely scenario is that the market is crashing and so the price "gaps" over your Limit.)
Now provided all that "could happen" stuff didn't happen, you placed an order OFF THE ORDER BOOK (reread that part) and your Limit was hit, your order was placed/filled, transaction done. You won't be charged that Taker fee since when you entered the Limit order the price wasn't on the Order book, so you "may be adding to the order book in the future" if your price is reached, and therefore considered a Maker and pay no fees. Sweet!
THIS IS WHERE YOU MAY INCUR FEE$ ON A LIMIT ORDER
**IF YOU PLACE A LIMIT PRICE THAT MATCHES AN ORDER PRICE ALREADY ON THE ORDER BOOK WAITING TO BE FILLED (and thus instantly complete the transaction "taking" liquidity off the order book). Again the distinction between Maker/Taker is whether or not the order is filled immediately or at some hypothetical time in the future. This is important to keep in mind when you you are picking your price targets for market moves or you may still end up paying Taker fees even though you are using Limit orders. Keep the current prices on the order book in mind before hitting that order button.
*Another important point to mention is to be sure the "POST ONLY" button is selected under Execution. However, if it's more important that you get your entire order filled once your Limit is reached, you may opt to "Allow Taker" now that you know the difference.

STOP ORDERS vs. STOP-LIMIT ORDERS:

Now that we've explained Market and Limit orders at length, it should make it easier to explain these STOP types.

STOP:
A Stop Order is basically just a way to automatically place a Market order once a certain price trigger is reached. This can be very useful in limiting your losses on the way down or locking in profits on the way up when you can't be glued to your screen to manually hit that order button. Be Aware - Because it is automatically placing a Market order, the order is a Taker order and will be charged fee$ as such
Take this example:
If you bought BTC @ $10,000 with the expectation that the price would move higher but, just in case it crashes...again... you still want to protect yourself from the downside fall and get out before it plummets, you could place a Stop order. This means that if the price moves against you and hits your trigger price, it will automatically place a Market order to Sell on the book to fill at the NEXT BEST MARKET PRICE available. This means that it may not be the same as the Stop price which triggered the order, depending on how fast the price is moving. (This difference in price from the order to actual execution is known as price "slippage"). This can be invaluable during those "flash" crashes when seemingly out of nowhere that BTC you just purchased for $15,000 is now within minutes/hours only worth $9,000. Gulp. A common beginner mistake is to fall in love with their purchase, and not want to sell it at any loss. Thus, they get stuck "holding the bag" as the price falls out waiting for the price to come back when that is anything but certain. Instead, a better option might be to set a Stop price where you believe that if it hits this price you believe the price will continue downward. It's better to sell for a minor loss as the price moves down and have that $$ freed up to buy back in (and possibly end up with even more coins!) at a cheaper price than to hold and have that money tied up, missing other opportunities and possibly having to sell at a much lower price if it doesn't rebound like you're praying for. Naturally this is more applicable to more frequent (day/swing) traders but anyone can benefit from it, especially in a volatile market. If you're a HODLer and in it for the long-term, the immediate volatility shouldn't affect your positions as much.

STOP-LIMIT:
Finally, a Stop-Limit order is, as the name would imply, a way to automatically place a Limit order (instead of a Market order as with a Stop order) once a certain Stop trigger price is reached. To enter a Limit price simply click the arrow next to "Advanced" on the order form.
Now remember: just because the order is placed automatically, all of the same Limit order spiel applies. This means that there are no guarantees that your order will be filled in whole or in part, and most importantly - IF, WHEN YOUR STOP PRICE IS TRIGGERED AND THE LIMIT ORDER IS PLACED, YOUR LIMIT PRICE MATCHES A PRICE ALREADY ON THE ORDER BOOK YOUR ORDER WILL BE FILLED IMMEDIATELY AND THEREFORE YOU WILL BE CHARGED A TAKER FEE
For this reason it's important to keep in mind the spread between when you want your order placed (Stop Price) and when you want it executed (Limit Price). Even though the Stop-Limit may have been set far out of range of the prices on the order book at the time, it only matters when the order is ACTUALLY placed (in other words, when the Stop price triggers the order) and the current prices on the order book.
This seems to be the part that many people misunderstand. Hopefully less so now!

THE END:
I know this ended up being a bit long-winded but hopefully it will be a help to some of you out there that may still have some gray area surrounding the different order types and how they behave, allowing you to keep more of your hard-earned money where you can use it to grow more. If played right on GDAX YOU CAN TRADE FREELY (as in as much as you want AND without paying any fee$!!) between the "Big 3" [BTC-ETH-LTC] and BCH. (This will change as Coinbase adds other currencies in the future but for now they're only hosting those 4 on their exchanges.)

IF YOU FOUND THIS HELPFUL PLEASE HELP A BROTHER OUT WITH AN UPVOTE CLICK and please share it with anyone else that may be new to the crypto community that you think may benefit. The more we help each other out the faster this community can grow and evolve, evoking positive change in the global financial fiasco and helping people take some power (and money) back.

ILLEGITIMI NON CARBORUNDUM

-B

Disclaimer: I've never been accused of knowing what I'm talking about, I just have opinions and stuff, so don't take any of this info as financial advice, but I hope it was educational nonetheless.