#TradingPairs101 š What Are Trading Pairs?
In crypto or forex trading, a trading pair represents two assets you can exchange one for the other.
For example:
$BTC /$ETH means you're trading Bitcoin for Ethereum.
EUR/USD means you're trading euros for U.S. dollars.
The first asset is the base currency, and the second is the quote currency. The pair shows how much of the quote currency is needed to buy 1 unit of the base.
š Why Trading Pairs Matter
Every trade involves buying one asset while selling another. So your profit or loss is relative to the pair you're trading. For instance, if you're trading ETH/BTC and ETH goes up faster than BTC, you profit.
š§ How to Choose the Right Trading Pairs
1. Understand Your Goal
Want to grow USD value? Stick with fiat pairs like BTC/USD or ETH/USDT.
Want to accumulate a specific coin (like BTC)? Trade altcoin/BTC pairs like ADA/BTC.
2. Liquidity Is Key
Choose pairs with high trading volume. This reduces slippage and ensures fast execution.
Example: ETH/USDT is more liquid than ETH/SUSHI.
3. Check Volatility
High volatility = higher potential profit but also higher risk.
Stable pairs (e.g., BTC/USDT) are good for trend-following.
Exotic or low-cap pairs (e.g., DOGE/SHIB) might suit short-term or scalping strategies.
4. Correlation
Avoid pairs that move identically (high correlation) unless youāre hedging.
Example: Trading both BTC/USDT and ETH/USDT might expose you to similar market moves.
5. Trading Fees & Spreads
Lower spreads and fees help frequent traders.
Binance, Coinbase, etc., often have varying fees across different pairs.
āļø Example Strategy: Trend Trading
If Iām trend trading to grow USD:
Iād look at BTC/USDT, ETH/USDT, and $SOL /USDT.
Filter for high volume and strong directional momentum.
Use indicators like moving averages or RSI to time entries.
š Final Tips
Stick with what you understand.
Always test new pairs in a demo or low-risk environment.
Keep an eye on news, fundamentals, and macro trends ā they affect different pairs differently.
