What are crypto trading pairs?

In other words, trading pairs represent how much of one token you can purchase with a given amount of a different token. Much like traditional currency trading, cryptocurrency exchanges rely on crypto trading pairs to illustrate each token’s value.

Why should you use trading pairs?

Another reason to use trading pairs is to decrease trading fees. If the trading pair did not exist, you would need to use at least two crypto trading pairs to obtain your desired cryptocurrency – and pay additional trading fees, as you would be committing to two trades as opposed to only one.

Why do exchanges use cryptocurrency pairs?

Exchanges utilize cryptocurrency pairs in order to facilitate the trade between different tokens. What Are Cryptocurrency Pairs? A cryptocurrency pair is essentially a comparison of the prices of two crypto tokens. The most popular cryptocurrency pair is ETH / BTC.

What are the limitations of pairs trading?

There are several limitations for pairs trading. One is that the pairs trade relies on a high statistical correlation between two securities. Most pairs trades will require a correlation of 0.80, which can be challenging to identify. Second, while historical trends can be accurate, past prices are not always indicative of future trends.