When buying, selling, or searching for cryptocurrencies on an exchange, you'll often encounter combinations like XXX/BTC, XXX/USDT, or XXX/TWD. Beginners might find this confusing, but seasoned traders recognize these as trading pairs.
Since trading pairs are the foundation of exchange transactions, take a minute to master this concept if you're new to it!
What Is a Trading Pair (Pair)?
In both forex and crypto markets, a currency's value is always relative. Currencies are traded in pairs.
To express the value of one currency, we use another as its reference. This combination forms a trading pair (Pair) or currency pair (Currency Pair), representing their exchange rate. The two currencies are separated by a slash "/".
For example:
- USD/TWD: The relationship between the US Dollar and New Taiwan Dollar ("USD against TWD").
- BTC/USD: The value of 1 Bitcoin in US Dollars.
Base Currency vs. Quoted Currency
Each currency in a trading pair has a specific role:
- Base Currency (first currency): The asset being valued (e.g., BTC in BTC/USDT).
- Quoted Currency (second currency): The valuation metric (e.g., USDT in BTC/USDT).
How to Trade Using Pairs?
Let’s break it down with examples:
Scenario 1: Holding BTC
- Use BTC/USDT to sell BTC for USDT.
- Use ETH/BTC to buy ETH with BTC.
The base currency’s position determines if you’re buying or selling.
Scenario 2: Holding ETH
- Use ETH/TWD to sell ETH for TWD.
- Use ETH/BTC to sell ETH for BTC.
Different pairs yield different currencies due to varying quoted currencies.
Key Takeaways
- Trading pairs express relative values between two currencies.
- Base currency = asset; quoted currency = valuation.
- Pairs dictate whether you’re buying or selling in a transaction.
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FAQ
Q: Can a currency be both base and quoted?
A: Yes! For example, ETH is the base in ETH/BTC but the quoted in BTC/ETH.
Q: How do I choose the best trading pair?
A: Consider liquidity, fees, and your target currency. Stablecoin pairs (e.g., USDT) often offer lower volatility.
Q: Why do exchanges list multiple pairs for the same coin?
A: To provide flexibility—e.g., trading BTC against USD, USDT, or other cryptos.
👉 Explore top-rated trading pairs
Disclaimer: Cryptocurrency trading carries high risk. This content is for educational purposes only and does not constitute financial advice. Trade at your own discretion.
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