Understanding Trading Pairs
A trading pair, often referred to as a pair, combines two cryptocurrencies that facilitates trading on a digital currency exchange.
It indicates which cryptocurrencies can be exchanged during a trade and is typically represented by a dash (—) or a slash (/) separating the two coins.
Trading pairs allow traders to buy BTC with ETH or sell Bitcoin to acquire ETH.
They play a fundamental role in cryptocurrency exchanges by enabling the exchange of different digital assets.
Unveiling Common Principles
In addition to crypto-to-crypto pairs, exchanges that support fiat currencies may also have fiat/crypto pairs. However, the underlying principles remain the same.
In a trading pair, the first is the base currency, while the second is the quote currency.
When selecting a trading pair, several factors come into play.
It is essential to consider whether the desired exchange supports the pair and whether the pair has sufficient liquidity.
Opting for a trading pair with low liquidity or trading volume may result in more extended order fulfillment times or incomplete order execution.