How pricing works
When viewing cryptocurrency prices on news sites and exchanges, the price is generally shown as a single figure. However, exchanges including Cointree actually have three types of prices for each cryptocurrency:
Buy price - also known as the Bid price on some exchanges. This is the minimum price that the market is willing to accept to give crypto to you.
Sell price - also known as the Ask price on some exchanges. This is the maximum price that the market is willing to pay for your crypto.
Spot price - or sometimes called the Last price. This is a figure between the Buy and Sell price and generally the figure used when a cryptocurrency price is mentioned.
Why are there three prices?
Cryptocurrency trading works similar to the stock market where people offer to buy and sell things at various prices. These offers go into an order book and a trade is only executed once there is a buy offer and sell offer that meet each other's prices. When a trade executes, the Spot/Last price is updated and the other offers remain in the order book until a match is later made or it is cancelled. The highest Buy offer is called the Bid price. The lowest Sell offer is called the Ask price.
We created Cointree to handle all of this and keep trading easy.
What price does Cointree show?
In line with the industry, Cointree generally displays the Spot price because this is the best indicator of the market. Most mentions of prices on Cointree, including account balances and portfolio tracker, use the Spot price.
When performing a trade, the applicable Buy/Sell price will be used. These prices can be found on the Coins & Prices within your Cointree account.
Cointree prices VS other exchanges
We sometimes see confusion why our prices may differ from certain other exchanges (sometimes for better, sometimes for worse). To answer this, it helps to break down the two types of exchanges:
Traditional exchanges are platforms with order books and limit orders. On the surface their prices can look competitive. However, when evaluating which price is better, the full order book should be considered, and not just the current Bid or Ask price.
For example, take this widget order book:
Question: How much will you pay for 1 widget?
The exchange will display the Ask price as $100. However, if you place an order for 1 widget at $100, the trade will not succeed. To buy 1 widget you need to pay $110.
This applies when selling as well. The Ask and Bid prices alone are not good enough for comparing prices across exchanges. The depth of the order book should be considered. It is a hidden cost that most traders don't realise.
Order success chance
We've seen in the example above that placing orders at the Bid or Ask price on traditional exchanges has a chance of not succeeding. This can lead to frustration and paying more than expected.
So, how is Cointree different?
Cointree's pricing engine caters for order book depth in its pricing so that our members don't need to worry. At times, depending on the market, this can result in a higher price than other exchanges, however, it's possible the order wouldn't succeed on that exchange anyway. To make sure our members always get good value, we provide transparent quotes so that you always know exactly what you're getting before you perform each trade.
These are services similar to Cointree where there is no order book and an easier trading experience compared to traditional exchanges.
Prices are easier to compare but there are some things to keep in mind:
- Is the exchange upfront about their fees? Be careful of any service saying they have no fees.
- Is the price only an estimate or does it look to good to be true? Cointree offers transparent quotes before any trade so that our members know exactly what they're getting every time.
- How long has the exchange been operating? Is the exchange registered with AUSTRAC and a member of Blockchain Australia? These are some signals (but not all) that help indicate if the exchange is trustworthy.
Few retail exchanges that have been around as long as Cointree (operating since 2013). Please do your due diligence and make sure you use a reputable service - there are many scams out there.