Cryptocurrency trading pairs — how it works

Buying and selling cryptocurrency involves trading pairs. To become successful at trading, you have to understand how trading pairs work since they are the starting point of any cryptocurrency trading process.

What is a trading pair?

The term trading pair describes the exchange of one cryptocurrency for another. The starting point for every crypto trading newbie will be to buy base cryptocurrencies, the most popular of which are Bitcoin, Ethereum, and Litecoin. This step is necessary as you can only buy other cryptocurrencies, or altcoins, with base currency on the exchange. With BTC, ETH, or LTC in your wallet, you can proceed to establish a trading pair of your liking.

How does it work?

The relationship of trading pairs mimics a commensalistic relationship as the rise and decline of one currency does indirectly impact the other. For instance, if Litecoin goes up 10% while Dash stays the same in a trading pair of Litecoin/Dash, then your Litecoin will buy some more Dash than before, depending on their ratio.

To successfully manage trading pairs, you need to closely follow the value of the base coins (Bitcoin, Ethereum, and Litecoin) in your domestic fiat currency. Additionally, you have to monitor the changing value of coins that you own, as essentially the main purpose of valuing your coins in base currency is to increase the value and number of the coins you hold. Click here to check our guide on the altcoins that perform well despite the bear market!