A “trading pair” refers to the combination of two different digital assets or cryptocurrencies that can be traded against each other on a cryptocurrency exchange platform. These pairs are essential for buying and selling cryptocurrencies, as they establish the terms under which one digital asset can be exchanged for another.
For instance, a common trading pair is BTC/USD, where BTC stands for Bitcoin, and USD represents the US Dollar. In this case, traders can buy Bitcoin using US Dollars or sell their Bitcoin to acquire US Dollars. Trading pairs allow investors to speculate on the price movements of various cryptocurrencies and make informed decisions about when to enter or exit the market.
It’s important to note that not all cryptocurrencies are directly paired with traditional fiat currencies like USD or EUR. Instead, they might be traded against other cryptocurrencies, such as BTC/ETH, where Bitcoin can be exchanged for Ethereum. Trading pairs provide liquidity to the market and enable traders to diversify their portfolios or hedge their investments, making them a fundamental concept in the cryptocurrency and investment space.