How do trading pairs work (base vs. quote currency)?
In any trading pair (for example, BTC/USDT or ETH/BTC), there are two components:
- Base currency (the first in the pair, e.g., BTC) is the asset that you buy or sell.
- Quote currency (the second in the pair, e.g., USDT) is the currency in which the base is assessed.
Example:
- If you buy BTC/USDT at the price of 60,000, it means that 1 BTC costs 60,000 USDT.
- If the pair rises (60,000 → 65,000 USDT), it means BTC is appreciating against USDT.
- If the pair falls (60,000 → 55,000 USDT), BTC is depreciating against USDT.
Trading in stablecoins (USDT, USDC) vs. cryptocurrency pairs (BTC, ETH)
I prefer stable pairs (BTC/USDT, ETH/USDC) because:
✅ Less volatility - the price is pegged to the dollar, making it easier to assess profit and loss.
✅ I avoid double risk - in pairs like ETH/BTC, you need to monitor the movement of both coins.
✅ Higher liquidity - most traders trade USDT pairs, so it's easier to enter and exit.
When do I choose cryptocurrency pairs (e.g., ETH/BTC)?
- If I see a strong movement of altcoins against BTC (altseason).
- For arbitrage between exchanges.
- When BTC is stable, and altcoins are showing growth.
How to choose the right pair for trading?
1. Liquidity - I check volumes on Binance, Bybit, OKX. The higher the volume, the less slippage.
2. Volatility - if the pair is too 'quiet', the profit will be small. If too volatile - high risk.
3. Correlation with BTC - many altcoins depend on Bitcoin. If BTC is falling, it's better not to buy ETH/BTC.
4. Spread - narrow spread = less loss on entry/exit.
5. Fundamental factors - if a coin has upcoming listings or updates, the pair may activate.
Example: how the choice of pair affected the trade
Good example (correct choice):
- In 2023, I traded SOL/USDT instead of SOL/BTC because BTC was in a downward trend.
- SOL rose against USDT, but in the SOL/BTC pair, the movement was weaker.
- Result: +40% in USDT, while in BTC equivalent it would only be +15%.
Bad example (mistake):
- In 2022, I opened a position in LTC/BTC, thinking that LTC would outperform BTC.
- But BTC sharply increased, while LTC lagged → loss in BTC terms.
- If I traded LTC/USDT, the loss would be smaller since USDT is more stable.
Conclusion
- USDT/USDC pairs - safer and easier for beginners.
- Cryptocurrency pairs (ETH/BTC, etc.) can be used, but you need to consider double risk.
- I always check liquidity, volatility, and market trend before entering.
Which approach is closer to you? Do you trade in USDT or prefer cryptocurrency pairs? 🚀
