How & where to buy Compound (COMP) online
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77% of retail CFD accounts lose money.
This is an introductory guide to Compound, where you can find out what it is and how it works. If you’re interested in learning more about the software or just want to find out where to buy it, this is a good place to start.
What are the best exchanges to buy Compound on?Copy link to section
If you’re ready to buy straight away, sign up for one of the brokers below. These are some of the top crypto brokers around, that have been vetted and reviewed by our team of experts. If you want to learn more about Compound beforehand, keep reading.
77% of retail CFD accounts lose money.
How to buy COMP online – a step-by-step guideCopy link to section
Step 1. Find an exchangeCopy link to section
An exchange is usually the best place to find altcoins. This is especially true for anything beyond the top five or ten coins, when an exchange might be your only option. Exchanges boast a range of features but look for one you can trust with the widest variety of coins available. Two of our favourites are:
- Binance: Binance manages the most trading volume, with millions of trades every day. It’s also usually the first port of call if you can’t find a coin elsewhere, with hundreds of different pairs available. Sign up for Binance now >
- ChangeNow: ChangeNOW lets you deposit fiat currency, and swap one cryptocurrency for another across nearly 200 individual crypto tokens. It also integrates with other leading exchanges to offer you the best price. Join ChangeNow today >
Step 2. Sign up and fund your accountCopy link to section
When you’ve chosen an exchange, the next thing to do is create an account. You won’t be able to do anything until you’ve done so, but all you need to provide is a few contact details and a form of photo ID for verification.
Then you need to deposit some money into the account. Most exchanges let you do this with fiat currency (like GBP or USD), while others may only accept cryptocurrency deposits.
Step 3. PurchaseCopy link to section
This step is simple: search for the relevant pair on your chosen exchange and hit buy to execute the trade. To find the pair you need the ticker for the coin you want and the currency you’re swapping it for, so it could be COMP/BTC in this case.
Step 4. (Optional) Get a suitable walletCopy link to section
Once you’ve successfully bought some coins, you need to decide where to store them. You can leave them in your exchange account, and this is fine if you only have a small holding. For some extra security, think about getting a wallet. Wallets store your coins so they can only be accessed with a private key that’s unique to you.
Here are two of the top wallets around:
- FreeWallet: FreeWallet is an online wallet that lets you access your coins through your web browser or a mobile app. It also integrates with an exchange so that you can trade coins straight from your wallet. Sign up for FreeWallet >
- StrongCoin: StrongCoin is a ‘hybrid’ wallet, a combination of an online wallet with an offline one that stores your coins on its central servers. Join StrongCoin today >
How to trade Compound – a step-by-step guideCopy link to section
Step 1. Find a brokerCopy link to section
If you want to trade cryptocurrency, you need a broker. You should choose one with low trading fees, as short term trading means opening and closing lots of positions regularly and high fees can be a big drain on your finances. eToro is the best place to try first.
Step 2. Deposit moneyCopy link to section
Brokers only accept deposits in fiat currency but they often charge for them as well. Similarly, they can charge for withdrawals too, along with trading fees. Before you sign up to anything, check the fee structure so you aren’t caught out by any surprises.
Step 3. Decide how you’d like to tradeCopy link to section
Most people trade coins using contracts for difference, also known as CFDs. This is a way of predicting the price movement of a coin without owning it outright, and if you’re just going to be getting in and out of positions quickly, CFDs might be the best way to go.
Step 4. Start tradingCopy link to section
Before you get going for real, think about whether you want to start with a demo account. Demo accounts let you use pretend money rather than putting your own capital at risk and almost every broker worth using will offer one. Often, it’s a case of clicking a button in your settings, so have a look.
The trading itself is quite simple, as you have to decide whether a coin is going to go up or down. If you think it’s going to go up, then you should buy it, which is also known as ‘going long’. The opposite is ‘going short’, if you think a coin is going to fall in price.
One other strategy worth knowing about is leverage. Leverage means putting down a small deposit as collateral to loan more money from your broker so that you can make trades at many times the value of that deposit. This can lead to big wins, but also big losses if the market moves against you.
77% of retail CFD accounts lose money.
Still undecided?Copy link to section
If you’re still not sure about Compound, don’t worry. You should always take some time to think about an investment, particularly when it comes to cryptocurrency. Below is a summary of the platform’s pros and cons, followed by a few more questions to help you.
ProsCopy link to section
- Earn interest on your coins or take out a loan
- You earn extra COMP tokens for participating in the platform
- Its use of ‘ctokens’ means you can still use your coins while they’re deposited
Finally, use the answers to these final three questions to help you decide whether to invest in Compound.
1. Is it a good time to buy Compound?Copy link to section
It depends on what sort of investor you are or whether you’re looking to actually use its services. If you’re the latter, it might be a good idea as you can vote on governance issues if you own coins.
Otherwise, if you’re looking to try to speculate on Compound to try to make a profit, it all starts with the coin’s price right now. If you’re a bullish long term investor, you might decide that it’s unlikely to go any lower, in which case you should get it now. Traders with a more short term view can use charts and tools to try to time their entry into the market. Either way, you can use our latest market analysis to help you:
2. What problem does Compound solve, and what are the coin’s investment prospects?Copy link to section
Compound solves the problem of borrowing and lending without the need for a bank. It incentivises people to stake their coins on its software to earn interest or to borrow other cryptocurrency and sets interest rates based on supply and demand.
Decentralised finance is growing fast and Compound is a well-established part of the industry. If that growth keeps up, its investment prospects look good. There are other lenders out there, like AAVE, who are worth comparing it against in terms of price and the services they offer, but the fact Compound is already backed by serious investors is a positive sign.
It’s worth noting that things change fast in cryptocurrency and there are no guarantees. It’s important to do your research before investing and to stay on top of the news as long as you hold a coin. We’ve covered the latest news you need to know about right here:
Compound’s COMP token rises as futures open interest jumps
COMP price jumps as Compound DeFi TVL slips to 2021 lows
Compound, Filecoin, Litecoin, GRT prices to soar if BTC blasts past $31,480
3. Do you want to hold Compound for the long term?Copy link to section
There are positives to holding long term just as there are for short term trading. It depends on what sort of investor you are, how active, and your appetite for risk. We’ve summarised the key things you need to know, however you like to invest.
Considerations for a long term investment strategy
If you’re bullish on the future of decentralised finance, investing in Compound can be a great way of getting in on the ground floor. In that case, the best place to buy COMP coins is on an exchange, and you should think about using a wallet to store them.
Considerations for a short term trading strategy
Short term investing is about using volatility in the market to your advantage. The aim is to make lots of moves that generate a little bit of money quickly and often. To trade this way, you should sign up to a broker with low fees, and think about using CFDs and leverage.
Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >