Best Cryptocurrency Pairs To Trade
Cryptocurrency has captured the imagination of traders for over ten years now and the hype shows no signs of slowing down. More and more people are eager to learn how to mine cryptocurrency and how to trade on the cryptocurrency market. Entering the market requires you to buy a commonly accepted cryptocurrency like Bitcoin using your own domestic currency and use that to buy other coins. It may become confusing to understand the best cryptocurrency coins to invest in if you are just about to begin in the industry. Therein lays the importance of trading pairs, therefore read this quick guide to understand the best cryptocurrency pairs to trade.
When you first buy cryptocurrency with domestic money (say USD), you buy something like Bitcoin or Ethereum whose prices in US dollars are clearly quoted. When you use Bitcoin to buy another cryptocurrency, however, the conversion rates can become confusing and hard to remember, as you need to remember the dollar value of the Bitcoin as well as the value of the cryptocurrency you want to purchase. The pair is basically the exchange rate between Bitcoin and the other currency.
How to value cryptocurrency pairs?
In order to know the best cryptocurrency pairs to trade, it is important to value all coins in terms of some base currency. This can happen in two ways. You can either convert the prices of Bitcoin and your chosen cryptocurrency into their dollar value, so as to track your monetary gains. You can also value all your chosen cryptocurrencies in terms of Bitcoin, which will help you increase your coin holdings.
How to choose the best cryptocurrency pairs to trade?
While many sites offer the current prices of cryptocurrency pairs, it can be hard to know which the best crypto trading pairs are. Certain indicators on the site itself can help you determine this.
- Volatility indicator
This refers to the number of cryptocurrency oscillations in one-minute intervals over the specified time period. The higher the volatility is, the more the possibility of earning high revenue.
- Relative Strength Index
This is an important indicator of trading risk and expresses the trend power in a range of 0 to 100. An RSI of less than 30 indicates that the cryptocurrency has been oversold, and an RSI of over 70 indicates that it has been overbought.
Overall trading in the cryptocurrency over the last 24 hours and whether there was any trading pump or dump are strong indicators of risk.