One of the first pieces of advice that we, as Arab whales, offer to our followers who are new to the field is to become familiar with crypto terminology.
One of the first terms that you may come across is the term trading pairs, or as it is known in English as trading pairs.
So what are trading pairs, what are their types and what are their uses in the crypto world? This is what we will discuss with you in the next article!
ᐅ Understanding digital trading pairs:
Digital trading pairs consist of two currencies that can be exchanged on the trading platform. These pairs are used to quote the value of one cryptocurrency against another. For example, BTC/USDT suggests trading Bitcoin ($BTC ) against Tether (USDT).
ᐅ Types of digital trading pairs:
❶. Cryptocurrency/Cryptocurrency Pairs: This includes trading various cryptocurrencies such as BTC/ETH and LTC/XRP. These pairs provide traders with the opportunity to benefit from price fluctuations in various digital currencies without having to convert them into traditional currencies.
❷. Cryptocurrency to stablecoin pairs: Examples include BTC/USDT and ETH/USDC. Stablecoins such as USDT and USDC provide stability to traders during periods of extreme volatility in the cryptocurrency market.
❸. Stablecoin-Based Pairs: Trading platforms use stablecoins as quote currencies for many pairs.
This provides greater stability of value and ease of trading. Examples include BTC/USDT and ADA/USDC.
❹. Cryptocurrency to Fiat Currency Pairs: Traders can buy and sell cryptocurrencies using traditional fiat currencies such as USD or EUR. These pairs make it easier to enter and exit the cryptocurrency markets. Examples include BTC/USD and ETH/EUR.
ᐅ What is the purpose of digital pairs trading?
Cryptocurrency pairs enable each currency in the pair to be valued without the need to use traditional funds. Digital trading pairs are an essential part of the digital economy and liquidity. Thanks to these pairs, traders can easily swap one digital currency for another, which increases the flexibility and ease of trading.
ᐅTrading mechanisms:
When a trader opens a trading position, the bid and ask price for each trading pair is determined by the exchange. The trader can buy or sell the base currency against the quote currency at the prices quoted.
ᐅ Read digital trading pairs:
Reading digital trading pairs is simple, as it consists of two parts: the base currency and the quote currency. The base currency is the first currency in the pair and is used to compare the second currency, which is known as the quote currency. For example, in the BTC/USDT pair, Bitcoin (BTC) is the base currency and Tether (USDT) is the quote currency. The quote currency is used to determine the value of the base currency.
ᐅ Trends in digital trading pairs:
The latest and emerging digital trading pairs are constantly changing according to market developments and investor interests. Exchanges offer unique pairs that reflect the needs of traders and growing market demands. For example, some exchanges offer special pairs such as DOGE/SHIB to cater to traders interested in these currencies.
ᐅ Trade cryptocurrency pairs with stable currencies:
Many digital trading pairs are linked to stablecoins on global exchanges. Stablecoins play an integral role in digital trading pairs with major exchanges such as Binance. The most widely used and liquid trading pairs usually include stablecoins backed by fiat denominations such as
USDC
USDT
BUSD
These stablecoins make it easier for investors to calculate value with traditional money as these currencies are pegged to the dollar.
Examples of popular trading pairs associated with stablecoins include:
• BTC/USDT
• ETH/BUSD
• BNB/USDC
ᐅ Conclusion:
Understanding digital trading pairs is essential for any trader in the cryptocurrency market. Whether you're new to the market or an experienced investor, mastering these concepts enhances your trading strategies and decision-making. Thanks to digital trading pairs, traders can achieve better opportunities and reduce risks in the volatile cryptocurrency market. These pairs also help reduce trading fees and increase trading efficiency, making them an indispensable tool in the world of cryptocurrencies.
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