Trading pairs are two assets people can trade with each other on an exchange and use them to quote one cryptocurrency against another. So, if you have visited Bitcoin brokerages, you will see trading pairs like ETH/USDT, BTC/USD, or ETH/BTC, and lots of other similar options. Therefore, a cryptocurrency trading pair combines this virtual currency with another cryptocurrency.
These virtual money trading pairs contain the ticker names of each cryptocurrency involved in the trade and have a slash separating the two. The first set of letters indicates the first cryptocurrency in the pair, and the second set shows the second asset. These letters are abbreviations of the names of the popular tokens of the cryptocurrency network, just like those of fiat currencies.
These digital currency trading pairs allow each asset to have a valuation without using conventional currency. Moreover, these virtual money trading pairs are a significant part of the crypto economy and liquidity. Also, this digital money trading pair has a composition of a base currency and a quote currency. The base currency is the first in the team that pairs the other digital currency. For instance, if you have a BTC/USD, the BTC is the base currency, while the USD is the quote currency. As the name suggests, the quote currency helps quote the base currency.
In Bitcoin trading pairs, there is a comparison between the values of one digital asset to another. A trading pair shows the base currency one needs to purchase one unit of the quote currency. For example, if BTC/USD is $6:8, one Bitcoin is worth 6:8 Ethereum.
When you purchase a Bitcoin pair, you are purchasing the base currency and selling the quote currency. On the other hand, if you enter a short position on a team, you are disposing of the base currency and purchasing the quote currency. Trading these virtual money pairs involve the simultaneous buying of one currency and selling of another. Even though you only have to make a single order, the buying and selling process is simultaneous and automatic.
In other words, if you initiate a buy order on BTC/ETH, you invest in this electronic currency against Ethereum. You are purchasing this digital money and automatically selling Ethereum because you believe this electronic asset will increase in price against Ethereum. On the contrary, if you think that the cost of this virtual money will drop against Ethereum, you will have to go short. Therefore, you are selling this digital asset and automatically investing in Ethereum.
Factors to Consider When Selecting Bitcoin Trading Pairs
When selecting these virtual money trading pairs, there are factors you should consider, including:
A trading strategy might be effective for one pair but not for another. For instance, a trading pair that works for BTC/ETH might not work for ETH/BTC. Therefore, before deciding on your Bitcoin trading pairs, you must develop the best and most tested trading strategy. To trade Bitcoin pairs, you will also need a reliable trading brokerage like https://bitcoin-loophole.live/
You should set realistic goals showing what you want to achieve after trading this electronic asset. Also, determine whether you need a pair that offers more trade opportunities. Moreover, find out whether you will need a more volatile pair since the more volatile the couple is, the higher the risk you will open. On the contrary, more volatile teams will also provide you with trade entries and potential profits. Also, a combination of high volatility and proper risk management should give you excellent results.
The Bottom Line
These digital money trading pairs are more complex and direct than they sound. Therefore, you should research thoroughly to learn different analysis types, trade management techniques, and risk management practices, among other essential skills.