How do trading pairs work?

How do trading pairs work?

By jordanjnr | Crypto Digest | 9 Dec 2019


This post took quite some time and effort to put together. I'd love a tip and follow to encourage my work. Cheers

You've seen some trading pairs before.

Head over to Binance and you'll see up to 36000 of them(you probably won't look through all 36000, but there are 36000).

Most trading pairs are made up of BTC against some other cryptocurrency.

But you can also have ETH against some,XLM,XRP and others.

In these cases,the currency on the left is called the base currency. It is the one you are comparing to the one on the right of the slash,called the quote currency.

The quote currency is the one that determines the exchange rate,which is the number associated with that pair.

Let's take an example.

Look at this pair: BTC/USD = $7480

BTC is the base currency.

USD is the quote currency.

If you were to buy 1 BTC with USD, it'll cost you $7480, and if you were to buy 7480 USD with BTC, it'd cost you 1 BTC.

Hope that made some sense.

So,how do trading pairs work? And what is a good enough interest rate on trading pairs?

To answer the first question, trading pairs work as a ratio of the quote currency to the base currency. In the above example,it would be tantamount to stating USD divided by BTC.

Another example: BTC/ETH = 0.02

Assume the price of ETH is $186,and BTC is $7480.

So BTC/ETH would be ETH divided by BTC. 

Which would yield the exchange rate,or the number after the equality sign.

So what interest rate is good for these kinds of pairs?

Well,since these pairs depend highly on the prices of both the base and quote currencies,anywhere from 0.2% per trade is fine.

You shouldn't even expect to get higher than that given the unstable nature of Cryptocurrencies.

I hope you gained something new!

Thanks for stopping by.

 

This post took quite some time and effort to put together. I'd love a tip and follow to encourage my work. Cheers


jordanjnr
jordanjnr

Hello! I am a Blockchain enthusiast,bitcoin investor,CEO of BigTycoon group and I love crypto! Hit me up @TycoontechBlog on twitter!


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