Topic: "pair trading" Help me with this term (Read 153 times)
Pair trading in terms of cryptocurrency is to achieve a neutral point by matching a long position with a short position. It will easy by trading with USDT pair as it can be compared quickly with US dollars. For example, if a trader wants to do pair trading with crypto A which is $500 per coin and crypto B which is $250 per coin, then to achieve neutral point, trader will have to buy 2 coins of crypto B and one coin of crypto A. The ratio of crypto A:crypto B is 1:2.
In cryptocurrency trading will be more easy to trade Bitcoin and altcoin with pair USDT because will be only make analysis in 1 coin, and will be more difficult to trade altcoin paired with BTC/ETH. When trade on pair Altcoin with BTC/ETH we must know which one will be a stronger uptrend. So for beginner trader will be more easy trade on pair CRYPTO/USDT, and will be less risk when all coin drop alot.
From the information I found on the Internet, I understood this:
I have two assets that need to be correlated, ie visually the graphics are similar and the movement of one asset repeats the movements of the second one. Each asset has its own average price from which it is rejected. This deviation is the spread. Thus, when the spread of both assets is minimal, ie the minimum gap between asset prices is visible on the chart, I sell one that is expensive and buy one that is cheap.
The most important question is: did I understand everything correctly?
If not, then, please correct it.
I have two assets that need to be correlated, ie visually the graphics are similar and the movement of one asset repeats the movements of the second one. Each asset has its own average price from which it is rejected. This deviation is the spread. Thus, when the spread of both assets is minimal, ie the minimum gap between asset prices is visible on the chart, I sell one that is expensive and buy one that is cheap.
The most important question is: did I understand everything correctly?
If not, then, please correct it.
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