What Are Crypto Trading Pairs?
A what are crypto trading pairs pair is a comparison between two cryptocurrencies that allows users to swap one for the other with a single transaction fee. Both centralized and decentralized contemporary cryptocurrency exchanges support this feature. The process resembles traditional stock market trading and is a sustainable design that is adapted to the digital world of crypto assets.
Each trading pair is defined by a base asset and a quote asset. The value of each asset is determined by the market and can change at any time. For example, a trading pair BTC/ETH shows how many units of the quote currency, in this case ETH, are needed to buy one unit of the base asset, in this case Bitcoin.
Demystifying Crypto Trading Pairs: A Beginner’s Guide
This feature is especially helpful for investors who are new to the crypto world because it allows them to trade different cryptocurrencies without having to sell the first to purchase the second, incurring multiple fees in the process. As a result, it is often the most cost-effective way to make trades in the crypto market.
Pairs trading also enables traders to profit from price discrepancies between exchanges. This is called arbitrage and it involves buying low on one exchange and selling high on another. It is a popular strategy among crypto traders and requires advanced technical analysis skills as well as sound risk management practices. This article is not intended as investment advice and should be taken with a grain of salt.