#TradingPairs101

🔁 1. What Is a Crypto Trading Pair

A trading pair lets you swap one crypto asset for another on an exchange.

Example: ETH/BTC lets you exchange Ethereum (base) for Bitcoin (quote)   .

• Base currency (first): what you’re buying/selling.

• Quote currency (second): what you use to pay or receive.

• If ETH/BTC = 0.05, it means 1 ETH costs 0.05 BTC  .

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🧭 2. Types of Pairs

• Fiat-to‑Crypto (e.g., BTC/USD, ETH/EUR) – ideal for converting crypto to cash .

• Stablecoin-to‑Crypto (e.g., BTC/USDT, ETH/USDC) – stable pricing and high liquidity .

• Crypto-to‑Crypto (e.g., ETH/BTC, BTC/LTC) – lets you swap one coin directly for another .

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💡 3. Why They Matter

• Liquidity: major pairs (BTC/USDT, ETH/USDT, BTC/USD) have tighter spreads and deeper books .

• Strategy options: supports direct swaps, arbitrage, or pairs trading .

• Portfolio management: use pairs to shift value between assets with minimal friction.

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🔍 4. How They Work

1. Choose your pair (e.g., ETH/USDT).

2. Check price: tells you how many USDT you need for 1 ETH.

3. Place order: buy ETH by paying USDT, or sell ETH to get USDT. 

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📈 5. Advanced Pair Strategies

• Triangular arbitrage: exploit price differences between three pairs (e.g., BTC/ETH → ETH/USDT → BTC/USDT) .

• Pairs trading (market-neutral): long one asset while shorting a correlated one, betting on convergence .

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⚠️ 6. What to Watch For

• Liquidity & spread: avoid illiquid pairs to reduce slippage .

• Fees: multiple swaps mean more trading and network costs .

• Volatility: crypto pairs can swing swiftly—factor in risk when swapping .