🔁 What Are Pairs in Trading?
A trading pair refers to the quotation of two assets exchanged with one another.
Example : In stocks/forex: EUR/USD signifies that you are exchanging euros for U.S. dollars.
In cryptocurrency, BTC/ETH indicates trading Bitcoin against Ethereum.
🧾 Definition:
The initial asset is what you are purchasing or trading.
The 2nd asset is what you utilize to assess value or exchange with.
📊 Categories of Trading Pairs
☄️Fiat-to-Cryptocurrency Pairs
Example: BTC/USD, ETH/EUR
☄️Pairs of Crypto-to-Crypto
Example: ETH/BTC, SOL/ETH
🧠 What Are the Benefits of Trading Pairs?
Case Description
📈 Arbitrage: Take advantage of price variations across
exchanges or resources.
📉 Hedging: Safeguard against negative fluctuations in
unstable markets.
🔄 Speculation: Wager on one asset exceeding the performance
of another.
💰 Access to Liquidity: Certain assets primarily trade in pairs, particularly
in the crypto market.
🔍 Understanding a Trading Pair
For ETH/BTC = 0.06, this indicates
1 ETH = 0.06 BTC
Selling 1 ETH will yield you 0.06 BTC.
💡 Advice for Newcomers
🔹Always be aware of which asset you are purchasing versus selling-
Errors in this situation can be costly - verify the pair again.
🔹Comprehend the primary & quoted asset
Base asset = Primary asset (the item you're trading)
Quote asset = Secondary asset (the currency it’s valued in)
🔹Particularly for less frequently traded pairs or tokens with low liquidity.
🔹Utilize limit orders for unstable pairs.
Looking to Practice?
Experiment with paper trading on platforms such as Binance, Coinbase, TradingView, or Forex simulation tools.
Utilize instruments such as:
CoinMarketCap or CoinGecko for cryptocurrency pair information.
Yahoo Finance or Finviz for tracking stock pairs.
