What is a crypto pair spread and why does it matter? 📊
🔹 A pair's spread measures the difference between two coins, calculated as a price difference or a price ratio.
🔹 Since coin prices vary greatly, traders compare relative price changes instead of raw prices.
🔹 A pair trader tracks changes in the spread rather than following just one coin's price.
🔹 The spread grows when one leg outperforms the other, and drops when the opposite happens.
For example: if A costs 10 and B costs 5, the A/B ratio is 2. If A rises to 11 while B stays at 5, the ratio becomes 2.2. The spread changed even though B didn't move!
⚠️ Common mistake: Looking only at one coin's price and forgetting that you are trading the difference between the pair.
How would you explain the spread to a friend in one sentence?
#Futures #CryptoTrading #CryptoEducation #RiskManagement
🔹 A pair's spread measures the difference between two coins, calculated as a price difference or a price ratio.
🔹 Since coin prices vary greatly, traders compare relative price changes instead of raw prices.
🔹 A pair trader tracks changes in the spread rather than following just one coin's price.
🔹 The spread grows when one leg outperforms the other, and drops when the opposite happens.
For example: if A costs 10 and B costs 5, the A/B ratio is 2. If A rises to 11 while B stays at 5, the ratio becomes 2.2. The spread changed even though B didn't move!
⚠️ Common mistake: Looking only at one coin's price and forgetting that you are trading the difference between the pair.
How would you explain the spread to a friend in one sentence?
#Futures #CryptoTrading #CryptoEducation #RiskManagement
