There are many ways to buy and sell Bitcoin. In this guide we will explain how to buy and sell Bitcoin from an exchange. By buying your first Bitcoin from an exchange you are making your very first trade… Welcome to the club of traders! If your goal is to profit from the price fluctuations in Bitcoin we recommend you to join our club. We offer the best trading tutorials and a mentor to help you on your way towards becomming a profitable (Bitcoin) trader. The Bitcoin market can be quite volatile, being able to read the chart like a professional trader will help you in your trading decisions. Now having said that let’s start by creating your first trading account on an exchange. In this guide we will be using Kraken, there are plenty more exchanges though. We prefer Kraken because they are reliable, fast and secure… however always do your own due dillegence when picking an exchange!
Step 1: Creating your trading account.
To create an account, first make sure you are visiting the official Kraken site at https://www.kraken.com.You can quickly create an account directly on the home page by typing your email, preferred username, and password.
The minimum password length is 8 characters but we recommend using a long unique password created by a password manager.
If the password is less than 25 characters long, it must contain one special character, one number, and cannot contain your username.
For more advanced options you can click the “Sign Up” button at the top right of the home page which will take you to https://www.kraken.com/signup. Note that the advanced account creation is completely optional.
On this page you enter the same details as before, but in the Advanced Options you can confirm your country of residence, time zone, and optionally add a master key or PGP public key.
The master key is a special passcode that is required during password resets, two factor authentication bypass requests, and removing the global settings lock security feature on Kraken.
You can only create a static password as your master key on this page but once you access your account you can change it to be a dynamic password using Google Authenticator or a YubiKey.
If you use PGP encryption for emails you can enter your public key and then all of our automated system emails will be sent to you encrypted.
You should receive an activation email containing a code which you can paste here, or alternatively complete activation by clicking the link in the email.
If you do not receive an activation email please check your spam folder and if you have not received the email please contact support.
Please confirm your password, complete the captcha and click the “Activate Account” button.
And that’s it! You have successfully created your Kraken account and you’re ready to get started.
Step 2: Verify your account
The law requires that they know who you are and where you are. The more services you need, the more information they have to collect from you.
- Tier 0 – you can look around but you can’t deposit, withdraw or make any trades. Email address required.
- Tier 1 – you can deposit and withdraw in digital currency only. Trading, however, is enabled in digital as well as fiat currencies. Full name, date of birth, country and phone number are required.
- Tier 2 – you can deposit, withdraw and trade in digital currency, and depending on your country of residence, fiat currency funding may be accessible to you. Bank deposits and withdrawals are available to clients in some areas at this tier and higher. You are required to provide your address.
- Tier 3 – fiat currency funding is available to Tier 3 clients and funding limits are much higher than Tier 2. You are required to upload a valid Government ID and a recent proof of residence (can be uploaded under ‘Get Verified’ tab of your Kraken account). In order to deposit fiat in the US, Canada, Germany, Austria, Japan, and other countries depending on what currency you intend to deposit, Tier 3 verification is required.
- Tier 4 – like Tier 3 but with even higher funding limits. There are both individual and corporate Tier 4 accounts. The required documents for Tier 4 individual accounts include a signed application form and KYC documents. Contact support if corporate account verification is necessary.
Once you submit your application, we’ll review it as soon as we can. Usually Tier 1 and 2 verification takes a few hours and Tier 3 verification takes no longer than a few days.
Step 3: Fund your account
To make a deposit, log in and go to Account > Funding > Deposit. Select the type of deposit you’d like to make and follow the given instructions.
For the different types of fiat deposits, check the following articles:
- How do I deposit EUR into my account?
- How do I deposit USD into my account? (US Resident)
- How do I deposit USD into my account (non-US Resident)
- How do I deposit GBP into my account?
- How do I deposit JPY into my account?
- How do I deposit CAD into my account?
For bitcoin deposits, please check the section Deposits: Bitcoin.
Step 4: buy and sell Bitcoin
Before you can start buying and selling, you’ll need to deposit funds into your Kraken account. Once your account is funded, you can use the order forms under the “New Order” tab to place orders. Note that the currency pair you select plays a role in determining what is bought or sold:
- If the “buy” button is selected and currency pair x/y is selected, then currency x will be bought and currency y sold.
- If the “sell” button is selected and currency pair x/y is selected, then currency x will be sold and currency y will be bought.
In order to buy or sell Bitcoin the two most basic order types are a market order or a Limit order.
Market: Buy (or sell) at the best average market price.
Limit: Buy (or sell) at a fixed price (or better).
The advantage of limit orders over market orders is that they can ensure a better average fill price, since the bids or asks used to fill the order will be at the limit (or better). The disadvantage is that there’s no guarantee the order will completely fill (or fill at all) – it may not be the case that adequate bids or asks to fill the order will appear on the market.
Examples: If the lowest current ask for XBT/USD is $96, but you think you can get your buy order filled a bit lower, you might put in a limit buy order at $94. You can also use market and limit orders to create short positions. For example, if the highest current bid for XBT/USD is $95, and you want to open a short position at $110, this can be done by placing a limit sell order at $110. This order will start to fill at $110 (or better) once bids at $110 (or higher) appear in the order book. For any short position, you are borrowing in order to open the position, so leverage must be used.
Once the order is placed and filled you have done your first trade!
If you need assistance or have questions about buying or selling Bitcoin please let us know!
More help can be found on the Kraken support page
In the next chapter we will explain mining Bitcoin (or other cryptocurrency)